New Economics Papers
on Business, Economic and Financial History
Issue of 2011‒08‒29
seventeen papers chosen by

  1. Real wages at the Cape of Good Hope: A long-term perspective, 1652-1912 By Pim de Zwart
  2. RThe Malthusian Intermezzo - Women’s wages and human capital formation between the Late Middle Ages and the Demographic Transition of the 19th century By Jan Luiten van Zanden
  3. Why didn’t Canada have a banking crisis in 2008 (or in 1930, or 1907, or ...)? By Michael D. Bordo; Angela Redish; Hugh Rockoff
  4. The Economic Integration of Forced Migrants – Evidence for Post-War Germany By Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
  5. How the West 'Invented' Fertility Restriction By Nico Voigtländer; Hans-Joachim Voth
  6. The Employment Effects of Immigration: Evidence from the Mass Arrival of German Expellees in Post-war Germany By Sebastian Braun; Toman Omar Mahmoud
  7. The genealogy of Eastern European difference: an insider’s view By Mikolaj Szoltysek
  8. Why Have Poorer Neighbourhoods Stagnated Economically, While the Richer have Flourished? Neighbourhood Income Inequality in Canadian Cities By Chen, W. H.; Myles, John; Picot, Garnett
  9. Was What Ail'd Ya' What Kill'd Ya'? By Robert W. Fogel; Louis Cain; Joseph Burton; Brian Bettenhausen
  10. Beyond Marshallian Agglomeration Economies: The Roles of the Local Trade Association in a Meiji Japan Weaving District (1868-1912) By Tomoko Hashino; Takafumi Kurosawa
  11. Irving Fisher, Debt Deflation and Crises By Robert J. Shiller
  12. The rise and fall of income inequality in Latin America By Leonardo Gasparini; Nora Lustig
  13. The role of state and creation of a market economy in Russia By Mau, Vladimir
  14. A Review and Bibliography of Early Warning Models By Yucel, Eray
  15. Credit growth and financial stability in the Czech Republic By Frait, Jan; Gersl, Adam; Seidler, Jakub
  16. Pay Cuts for the Boss: Executive Compensation in the 1940s By Carola Frydman; Raven Molloy
  17. Impacto do Sistema Cooperativo de Crédito na Eficiência do Sistema Financeiro Nacional By Michel Alexandre da Silva

  1. By: Pim de Zwart
    Abstract: Employing recently assembled wage and price data, this paper sketches the long-term development of real wages at the Cape of Good Hope, from its foundation in 1652 up to the unification of South Africa in 1910. The results show that real wages were consistently above subsistence level, and living standards were continuously improving throughout the period under discussion. The comparison with the most developed parts of Europe has shown that during the early decades of the colony’s existence, the Cape labourers had a relatively low purchasing power. Yet, by the end of the eighteenth century living standards began to close the gap, and during the nineteenth century, Cape living standards were on a par with those on the European continent. An analysis of growth rates suggests that during the second half of the seventeenth century growth was minimal. The eighteenth century was a period of steady (though not spectacular) growth of Cape living standards, while during the same century workers in other parts of the world saw their purchasing power diminish. The nineteenth century, on the other hand, was a period of a general rise of prosperity in Europe, in the light of which the Cape’s welfare growth seems exceptionally slow (in spite of secure property rights and resource windfalls). These findings contrast with the conventional view of South Africa’s economic history.
    Keywords: Colonial history, growth, labour, living standards, South Africa
    Date: 2011–08
  2. By: Jan Luiten van Zanden
    Abstract: Why did the European Marriage Pattern that emerged in the North-Sea region in the late Medieval Period not result in a continuous shift from ‘quantity’ to ‘quality’? This paper addresses this question focusing on the changing labour market position of women in England between 1500 and 1800. It is demonstrated that the gender wage gap increased strongly in this period; wages of women working in agriculture fell from about 80% to 40% of the wages of an unskilled labourer. This was probably the result of a decline in the demand for female labour in this period due to changes in the structure of agriculture, and was possibly also related from the movement from a labour scarcity economy in the 15th century to a labour surplus economy in 18th and early 19th century. This decline in female labour participation and in particular in the relative wages earned by women had important consequences for demographic behaviour and investment in human capital of children. It helps to explain the ‘baby boom’ of the second half of the 18th century, and the stagnation in human capital formation that occurred at the same time – in short, it contributes to the understanding of the ‘Malthusian intermezzo’ of this period.
    Keywords: Demographic change, European Marriage Pattern, Female wage gap, Female labour participation
    Date: 2011–08
  3. By: Michael D. Bordo; Angela Redish; Hugh Rockoff
    Abstract: The financial crisis of 2008 engulfed the banking system of the United States and many large European countries. Canada was a notable exception. In this paper we argue that the structure of financial systems is path dependent. The relative stability of the Canadian banks in the recent crisis compared to the United States in our view reflected the original institutional foundations laid in place in the early 19th century in the two countries. The Canadian concentrated banking system that had evolved by the end of the twentieth century had absorbed the key sources of systemic risk—the mortgage market and investment banking—and was tightly regulated by one overarching regulator. In contrast the relatively weak, fragmented, and crisis prone U.S. banking system that had evolved since the early nineteenth century, led to the rise of securities markets, investment banks and money market mutual funds (the shadow banking system) combined with multiple competing regulatory authorities. The consequence was that the systemic risk that led to the crisis of 2008 was not contained.
    JEL: N20
    Date: 2011–08
  4. By: Thomas K. Bauer; Sebastian Braun; Michael Kvasnicka
    Abstract: The fl ight and expulsion of Germans from Eastern Europe during and after World War II constitutes one of the largest forced population movements in history. We analyze the economic integration of these forced migrants and their off spring in West Germany. The empirical results suggest that even a quarter of a century after displacement, fi rst generation migrants and native West Germans that were comparable before the war perform strikingly diff erent. Migrants have substantially lower incomes and are less likely to own a house or to be self-employed. Displaced agricultural workers, however, have signifi cantly higher incomes. This income gain can be explained by faster transitions out of low-paid agricultural work. Diff erences in the labor market performance of second generation migrants resemble those of the fi rst generation. We also fi nd that displacement considerably weakens the intergenerational transmission of human capital between fathers and children, especially at the lower tail of the skill distribution.
    Keywords: Forced migration; economic integration; World War II; West Germany
    JEL: J61 O15 R23
    Date: 2011–07
  5. By: Nico Voigtländer; Hans-Joachim Voth
    Abstract: Europeans restricted their fertility long before the 'Demographic Transition.' By raising the marriage age of women and ensuring that a substantial proportion remained celibate, the "European Marriage Pattern" (EMP) reduced childbirths by up to 40% between the 14th and 18th century. In a Malthusian environment, this translated into lower population pressure, raising average wages significantly, which in turn laid the foundation for industrialization. We analyze the rise of this first socio-economic institution in history that limited fertility through delayed marriage. Our model emphasizes changes in agricultural production following the Black Death in 1348-50. The land-intensive production of meat, wool, and dairy (pastoral products) increased, while labor-intensive grain production declined. Women had a comparative advantage producing pastoral goods. They often worked as servants in husbandry, where they remained unmarried long after they had left the parental household. The emergence of EMP enabled Europe to shift from a high-fertility, low income to a low-fertility, high income Malthusian steady state. We demonstrate the importance of this effect in a calibration of our model and show why the same shock to population did not have similar consequences in China.
    JEL: E20 N13 N33 O14 O41
    Date: 2011–08
  6. By: Sebastian Braun; Toman Omar Mahmoud
    Abstract: This paper studies the employment effects of the influx of millions of German expellees to West Germany after World War II. The expellees were forced to relocate to post-war Germany. They represented a complete cross-section of society, were close substitutes to the native West German population, and were very unevenly distributed across labor market segments in West Germany. We find a substantial negative effect of expellee inflows on native employment. The effect was, however, limited to labor market segments with very high inflow rates. IV regressions that exploit variation in geographical proximity and in pre-war occupations confirm the OLS results
    Keywords: Forced migration, employment, post-war Germany
    JEL: J61 J21
    Date: 2011–08
  7. By: Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: The view of Eastern Europe as a locus of complex family organisation and familistic societal values has reached the status of general dogma in Western social sciences and demography. By offering an overview of almost entirely unknown scholarly achievements of Eastern Europeanists, this essay represents an attempt to persuade scholars to accept less stereotypical images of families from outside ‘Western Europe’. Well into the late 1990s, Eastern European literature on family forms remained screened off from the main current of European thought. Thus, not surprisingly, tracing the lineage of work from east of the ostensible Hajnal Line reveals the sharp differences between the findings of Eastern European researchers and the dominant assumptions of Western science. These marginalised discourses need to be integrated into mainstream research and discussion, so that scholars can better understand marriage, family, household and community patterns in Europe and elsewhere. The diversity of family forms and the rhythms of their development in historical Eastern Europe revealed in this literature also provide us with an excellent opportunity to free ourselves from a simplistic view of the continent’s familial history, and particularly from the one implied by the notion of a ‘dividing line’.
    Keywords: family forms, historical demography, household composition, marriage
    JEL: J1 Z0
    Date: 2011–08
  8. By: Chen, W. H.; Myles, John; Picot, Garnett
    Abstract: Higher income neighbourhoods in Canada’s eight largest cities flourished economically during the past quarter century, while lower income communities stagnated. This paper identifies some of the underlying processes that led to this outcome. Increasing family income inequality drove much of the rise in neighbourhood inequality. Increased spatial economic segregation, the increasing tendency of “like to live nearby likeâ€, also played a role. In the end, the differential economic outcomes between richer and poorer neighbourhoods originated in the labour market, or in family formation patterns. Changes in investment, pension income, or government transfers played a very minor role. But it was not unemployment that differentiated the richer from poorer neighbourhoods. Rather, it was the type of job found, particularly the annual earnings generated. The end result has been little improvement in economic resources in poor neighbourhoods during a period of substantial economic growth, and a rise in neighbourhood income inequality.
    Keywords: Inequality, Neighbourhood, Poverty
    JEL: R23 J31
    Date: 2011–08–21
  9. By: Robert W. Fogel; Louis Cain; Joseph Burton; Brian Bettenhausen
    Abstract: Making use of those Union Army veterans for whom death certificates are available, we compare the conditions with which they were diagnosed by Civil War pension surgeons to the causes of death on the certificates. We divide the data between those veterans who entered the pension system early because of war injuries and those who entered the pension system after the 1890 reform that made it available to many more veterans. We examine the correlation between specific conditions and death causes to gauge support for the hypothesis that death is attributable to something specific. We also examine the correlation between the accumulation of rated conditions to time until death to gauge support for the “insult hypothesis.” In general, we find support for both hypotheses. Examining the hazard ratios for dying of a specific condition, there is support for the idea that what ail’d ya’ is what kill’d ya’.
    JEL: I1 N11
    Date: 2011–08
  10. By: Tomoko Hashino (Graduate School of Economics, Kobe University/ Department of History, George Washington University); Takafumi Kurosawa (Graduate School of Economics, Kyoto University)
    Abstract: Recent studies have shown that economic development based on industrial districts or clusters is common not only in the Western nations but also among many developing countries, as Marshall might have anticipated. Similarly, in the development process of modern Japan, many industrial districts developed in various industries. Interestingly, they were much more organized and institutionalized than Marshall described. This article demonstrates that local trade associations had an important role in enhancing Marshallian externalities by facilitating joint actions for the supply of public goods, such as the creation of glocal district brandsh and provision of technological and market information. In this article, we consider the case of Kiryu, which was one of the oldest and best-known silk weaving districts in modern Japan.
    Keywords: industrial district, industrial cluster, weaving industry, local trade association, joint action, modern Japan
    Date: 2011–08
  11. By: Robert J. Shiller (Cowles Foundation, Yale University)
    Abstract: It is the 100th anniversary of Irving Fisher’s 1911 book The Purchasing Power of Money. But, more important than that, it is a good time, during the current financial turmoil, to reconsider some of his theories again, in light of current events. And I think that some of his theories about variations in the purchasing power of money are very important today, have been underappreciated, and are worthy of considering anew.
    Keywords: Purchasing power of money, Indexation, Indexed bonds, Depression, Recession, Mortgages, Financial crisis
    JEL: B22
    Date: 2011–08
  12. By: Leonardo Gasparini (CEDLAS, Universidad de La Plata); Nora Lustig (Tulane University and Center for Global Development)
    JEL: D31 D33 H53 J48 O15 O54
    Date: 2011
  13. By: Mau, Vladimir (BOFIT)
    Abstract: This paper examines the role of institutions in economic growth and the role of the institutions created by the Russian state in particular. The author stresses the finding that growth-supporting institutions vary according to the level of economic development in a country. In a post-industrial society, that Russia aspires to be, further economic development requires promotion of institutions securing e.g. property rights and economic freedom. Finally, based on these observations, the three development scenarios frequently discussed in the current Russian economic policy debates are analysed.
    Keywords: modernisation; role of institutions; economic development; Russia
    JEL: O10 O20 O30
    Date: 2011–08–22
  14. By: Yucel, Eray
    Abstract: This note is intended to share some observations regarding a non-exhaustive collection of the early warning literature from 1971 to 2011. Evolution of the interest in early warning models, methodological spectrum of studies and coverage of economic variables are briefly discussed in addition to providing a bibliography.
    Keywords: Early warning systems; bibliometric analysis
    JEL: C00 Z00
    Date: 2011–08–18
  15. By: Frait, Jan; Gersl, Adam; Seidler, Jakub
    Abstract: The Czech Republic had experienced a credit boom similar to those in other converging economies in the pre-crisis years. Nevertheless, the consequences of this credit boom were limited as was the impact of the global crisis on domestic financial institutions. This paper describes the developments in the Czech banking sector and explains how the tough macroeconomic environment in the Czech Republic acted as a strong tool of macroprudential policy. It concludes that although it is difficult to tame credit booms in small converging economies, a concerted set of microprudential and macroprudential measures, including monetary and fiscal ones, may ensure some success.
    Keywords: Banks&Banking Reform,Debt Markets,Currencies and Exchange Rates,Access to Finance,Emerging Markets
    Date: 2011–08–01
  16. By: Carola Frydman; Raven Molloy
    Abstract: Executive pay fell during the 1940s, marking the last notable decrease in the past 70 years. We study this decline using a new panel dataset on the remuneration of top executives in 246 firms. We find that government regulation—including explicit salary restrictions and taxation—had, at best, a modest effect on executive pay. By contrast, a decline in the returns to firm size and an increase in the power of labor unions contributed greatly to the reduction in executive compensation relative to other workers’ earnings from 1940 to 1946. The continued decrease in relative executive pay remains largely unexplained.
    JEL: G3 J31 M50 N32
    Date: 2011–08
  17. By: Michel Alexandre da Silva
    Abstract: The aim of this paper is to analyze the impact of the Brazilian Cooperative Credit System (CCS) in the macroeconomic efficiency of the National Financial System (NFS), meant here as the capacity in supplying cheap financial services in a uniform way. Two aspects were evaluated: the participation of the CCS in the credit supply and the capillarity of the CCS. The paper concludes that the CCS contributes to the NFS efficiency in some aspects (e.g., greater share in poor-targeted credit), but not in others (e.g., greater absence in less developed regions).
    Date: 2011–08

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