New Economics Papers
on Business, Economic and Financial History
Issue of 2007‒06‒02
thirteen papers chosen by

  1. How Does Family Structure Affect Children’s Outcomes? Evidence from the Civil War. By Frankel, David M.
  2. Household Strategies of Labor Allocation and Living Standards of Pregnant Women in Modern Rural Japan: A Case Studies of Aomori Prefecture and North-eastern Part of Japan in the 1910s and 1930s By Izumi Shirai
  3. Political Dynasties By Ernesto Dal Bó; Pedro Dal Bó; Jason Snyder
  4. Give and Take: Political Competition, Participation and Public Finance in 20th Century Latin America By Aidt, T.S.; Eterovic, D.S.
  5. Corporate Governance and Firm Value in Mexico By Alberto Chong; Florencio López-de-Silanes
  6. Corporate Governance and Firm in Latin America By Alberto Chong; Florencio López-de-Silanes
  7. Persistência do tradicional: o processo de modernização da agroindústria canavieira do Brasil e a sobrevivência de formas produtivas não-capitalistas By Marcelo Magalhães Godoy
  8. Experiência espanhola de planejamento regional By Rodrigo Ferreira Simões
  9. ‘Running in the Family’ The Evolution of Ownership,Control and Performance in German Familyowned Firms, 1903-2003 By Olaf Ehrhardt; Eric NOWAK; Felix-Michael WEBER
  10. Incentive Regulation of Electricity Distribution Networks: Lessons of Experience from Britain By Jamasb, T.; Pollitt, M.
  11. A Neoclassical Analysis of the Brazilian "Lost-Decades" By Flávia Mourão Graminho
  12. Government debts and credit markets in Renaissance Italy By Luciano Pezzolo
  13. Corporate Finance in Europe: A Survey By Francois Degeorge; Ernst Maug

  1. By: Frankel, David M.
    Abstract: We propose a novel approach to measuring the causal effect of family structure on a child’s outcomes. In a war, some fathers are killed in action and cannot return to their families. This creates a natural experiment in which the effects of a father’s absence can be tested. Using data from the U.S. Civil War, we find no evidence that a father’s death in the war affected his child’s labor income as a young adult. We also find no effect on labor force participation or the chance of being married in 1880. Daughters of fathers who died were less likely to be students in 1880, although we find no such effect on sons.
    Keywords: Family structure, female headed families, Civil War, natural experiments.
    JEL: J0
    Date: 2007–05–24
  2. By: Izumi Shirai (Graduate School of Economics, Osaka University)
    Abstract: In this paper, it examines the relationship between the infant mortality rate (IMR) and introduction of new agricultural laborsaving technology which contributed to reduce labor absorption in rice production and labor intensity and increase the agricultural productivity by using the data of modern rural North-eastern Japan c.a. 1910s to 1930s. Assuming that IMR is the index of the living standards and the agricultural productivity and labor intensity is the one of the level of introduction of new technology, we focus on the structure of infant death in order to clarify the general labor environment of pregnant women. As results of the analysis, the followings are becoming clarified; 1) the innovation and diffusion of agricultural technology, by which human agricultural labor was dramatically saved and the agricultural productivity was increased, caused the decline of IMR through the rise of agricultural productivity; 2) the expansion of cottage industry among the peasant household contributed to decline of IMR by reallocating family labor mainly to non-agricultural works. From these results, this paper presents the change of the labor allocation strategy of the peasant household makes the effect on the improvement of their living standards in modern rural Japan.
    Keywords: infant mortality, peasant household, agricultural technological development, dual occupation, household strategy of labor allocation
    JEL: N35 N55 R29
    Date: 2007–06
  3. By: Ernesto Dal Bó; Pedro Dal Bó; Jason Snyder
    Abstract: We study political dynasties in the United States Congress since its inception in 1789. We document historic and geographic patterns in the evolution and profile of political dynasties, study the extent of dynastic bias in legislative politics versus other occupations, and analyze the connection between political dynasties and political competition. We also study the self-perpetuation of political elites. We find that legislators who enjoy longer tenures are significantly more likely to have relatives entering Congress later. Using instrumental variables methods, we establish that this relationship is causal: a longer period in power increases the chance that a person may start (or continue) a political dynasty. Therefore, dynastic political power is self-perpetuating in that a positive exogenous shock to a person's political power has persistent effects through posterior dynastic attainment. In politics, power begets power.
    JEL: D70 J45 N41 N42
    Date: 2007–05
  4. By: Aidt, T.S.; Eterovic, D.S.
    Abstract: Rational choice models predict that political competition and political participation have opposite effects on the size of government. We investigate these theories using data from a panel of 18 Latin American countries during the 20th century. Our research builds evidence for the prediction that reforms enhancing political competition tend to limit the size of government, while reforms increasing political participation tend to increase the size of government. Furthermore, we find that reforms which remove literacy requirements from franchise laws are associated with governmental expansion, while changes in women.s su¤rage laws have no impact on the size of government. Our findings demonstrate the empirical relevance of the distinction between political competition and participation.
    Keywords: Political competition, political participation, the extension of the franchise, women.s su¤rage, literacy requirements; size of government; school enrollment.
    JEL: D7 H11
    Date: 2007–04
  5. By: Alberto Chong (Inter-American Development Bank); Florencio López-de-Silanes (Ecole Normal Superieur, University of Amsterdam and National Bureau of Economic Research)
    Abstract: The objective of this paper is twofold. On one hand, we undertake an analysis of the recent evolution of capital markets and their effect on the availability of external financing in Mexico in the last two decades. On the other hand, based on a newly assembled firm-level data set on corporate governance and firm performance, we show that better firm-level corporate governance practices are linked to higher valuations, better performance and more dividends disbursed to investors. These results hold after controlling for endogeneity. Overall, the evidence shows that the Mexican legal environment poses serious problems for access to capital.
    Date: 2006–07
  6. By: Alberto Chong (Inter-American Development Bank); Florencio López-de-Silanes (University of Amsterdam and National Bureau of Economic Research)
    Abstract: This paper analyzes recent trends of Latin America’s institutional development regarding investor protection. In spite of the underdevelopment of the region’s financial markets, there is slow movement towards legal reforms intended to protect investors and make regional markets more attractive to investors; current inadequacies in the region’s legal institution’s generate high levels of ownership concentration, poor access to external equity financing, and narrow equity markets. The evidence in this paper, based on firm-level data for six countries, shows that, like legal protection of investors, appropriate firm-level corporate governance is linked to lower costs for capital, better valuation, performance, and dividend payments across countries. Firms can compensate for their countries’ legal deficiencies by distinguishing themselves through improved corporate governance practices, thus increasing transparency and limiting potential conflict between large and minority shareholders. Firms can additionally look for capital by issuing ADRs, as they have in recent years, although this practice undermines local capital markets. In the end, firms and regulators must improve their governance structures and shareholder protections if they are to meet the improved benchmarks of developed nations brought about by Asian, European, and U.S. scandals in recent years.
    Keywords: Corporate governance; Investor protection; Corporate valuation
    JEL: G32 L22
    Date: 2007–03
  7. By: Marcelo Magalhães Godoy (Cedeplar-UFMG)
    Abstract: Sugarcane plantations industry, the oldest and more important activity of rural transformation in Brazil, experienced profound metamorphosis in twentieth century. This process began in the last quarter of the previous century, and resulted in the progressive establishment of an essentially new reality. Those changes were grounded on technological modernization, which was always legitimated by the ideology of progress and led by the big rural, industrial and commercial capitals which controlled the sugarcane plantations sector. Among the political transformations which changed the Brazilian State profile and molded economic policies based on another institutional structure and on distinct instrumental resources, the incisive intervention by the State in sugarcane activities, since the beginning of the third decade of twentieth century, was regulated by meeting classes' interests. The State was protagonist of transformations which resulted in intensification of an age long process of expropriation and impoverishment for the great majority of producers and workers. Nevertheless, the perversion of the concept 'modern', expressed in economic and technological transformations along with the preservation or deterioration of archaic social structures, made possible the survival and reproduction of the traditional. The maintenance of non-capitalist forms as a way to amplify the exploration of work and optimize profit was of particular interest to the capital.
    Keywords: Sugarcane plantation activities; modernization; Minas Gerais; Brazil
    JEL: N46 N56 N96
    Date: 2007–05
  8. By: Rodrigo Ferreira Simões (Cedeplar-UFMG)
    Abstract: This paper analyses the Spanish experience on regional planning during the XXth century. It starts with a brief exposition about the Spanish regional imbalances and its institutional framework. After this the paper presents historically the Spanish experience on regional policy and planning, since the period of Franco Government until the entrance on European Union. It concludes speculating about the effects of European Cohesion Policy and Europe-21 in Spanish territory.
    Keywords: Spain; regional planning
    JEL: R58 N34 N94
    Date: 2007–05
  9. By: Olaf Ehrhardt (University of Applied Sciences Straslund und Humboldt University Berlin); Eric NOWAK (University of Lugano); Felix-Michael WEBER (Elephant Equity, Munich)
    Abstract: In this study we analyze the evolution of ownership, control, and performance in German founding-family-owned firms over the last century. We employ a hand-collected matched sample of German stock companies founded before World War I and still in existence in 2003. Comparing family-owned and non-family-owned firms over the 100-year time-span, we are able to analyze a variety of variables including ownership, control, industries, bank relationships and performance, as well as the impact of intergenerational control transfers. We find that families are slow to give up ownership , and control of family businesses remains strong even after several generations. Family firms seem to outperform nonfamily firms in terms of operating performance, but performance declines over the generations.
    Keywords: Family firms, performance, ownership, control, German stock markets
    JEL: G32 N23 N24
    Date: 2004–07
  10. By: Jamasb, T.; Pollitt, M.
    Abstract: This paper reviews the recent experience of the UK electricity distribution sector under incentive regulation. The UK has a significant and transparent history in implementing incentive regulation in the period since 1990. We demonstrate the successes of this period in reducing costs, prices and energy losses while maintaining quality of service. We also draw out the lessons for other countries in implementing distribution sector reform. We conclude by discussing the place of incentive regulation of networks within the wider reform context, the required legislative framework, the need for appropriate unbundling, the importance of quality of service incentives, the regulatory information requirements and the role of sector rationalisation.
    Keywords: Electricity, liberalisation, regulation, benchmarking
    JEL: L52 L94 Q48
    Date: 2007–02
  11. By: Flávia Mourão Graminho
    Abstract: After the World War II, Brazil was one of the fastest growing economies in the world, growing at an average rate of more than 7% from 1950 to 1980. While Brazilian per capita GDP was roughly 15% of the U.S. per capita GDP in 1950, it achieved 30% in 1980. However, since then, Brazil has been growing at small or even negative rates, and in 1998 its per capita GDP was back to 20% of the U.S.. This paper investigates possible reasons for what is usually called the Brazilian "lost decades", based on an accounting procedure applied to a simple neoclassical model as in Chari, Kehoe and McGrattan (2006). After decomposing four types of shocks (productivity, labor, capital and income accounting), each of them is fed back into the model and the predicted and actual data are compared. It is shown that, for the case of the Brazilian "lost decades", productivity shocks seem to be the most important factor in explaining the behavior of output and consumption during the eighties, and labor shocks are the main responsible for the behavior of the variables of interest during the nineties. Increased barriers to competition and the changes imposed by the 1988 Constitution in labor markets are possible explanations for the results.
    Date: 2006–11
  12. By: Luciano Pezzolo (Department of Economics, University Of Venice Ca’ Foscari)
    Abstract: At first sight a marked difference turns out among the Italian governments of early Renaissance: the means of financing their deficit. There are, on the one hand, communal cities and republics, raising money from citizens through the system of forced or voluntary loans; there are, on the other, princes and lords who exploit services of bankers and merchants. These two different systems of borrowing bring about significant financial and political aspects. In this paper I will examine the main features characterizing the two mechanisms of indebtedness and the implications concerning the emergence of a true financial market connected with state bonds.
    Keywords: Public debts; Renaissance Italy; financial markets; financial institutions
    JEL: N2 N23
    Date: 2007
  13. By: Francois Degeorge (University of Lugano and Swiss Finance Institute); Ernst Maug (School of Business Administration, University of Mannheim)
    Abstract: We survey research on corporate finance in Europe. The ambition is to provide the reader with an overview of what we learned, particularly since the beginning of the 1990s. We focus on two themes: (1) the practice and institutions in Europe are heterogeneous and different from those in the United States, and we identify areas where the gap seems to be narrowing; (2) we wish to draw some more general conclusions with respect to the law and finance paradigm that has dominated recent research on comparative institutional analysis, and the diversity of European institutions seems to present an ideal testing ground for this approach. We find that the ability of the law and finance approach to capture the relevant differences within Europe is often limited. We focus in particular on equity primary markets;privatizations; cross-listings; capital structure and payout policy; mergers and acquisitions; business groups, pyramids and dual class shares; and valuation and the cost of capital.
    Keywords: Corporate finance, Europe
    JEL: G3
    Date: 2006–06

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