nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2016‒12‒18
27 papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The Deep Roots of Rebellion: Evidence from the Irish Revolution By Gaia Narciso; Battista Severgnini
  2. Atmospheric Pollution and Child Health in Late Nineteenth Century Britain By Bailey, Roy E; Hatton, Timothy J.; Inwood, Kris
  4. J.S.Mill and Ireland's 'Land Question': An illustration of his views on social institutions By Laura Valladão Mattos
  5. "The political economy of wage and price controls: evidence from the Nixon tapes" By Burton A. Abrams; James L. Butkiewicz
  6. Reflections on Keynes's Essays in Biography By Geoffrey C. Harcourt
  7. George Stigler y su influencia en la transformación económica de Chile By Cristián Larroulet Vignau
  8. On the Dispensability of New Transportation Technologies : Evidence from Colonial Railroads in Nigeria By Dozie Okoye; Roland Pongou; Tite Yokossi
  9. Regionalization and Consolidation of Municipal Taxes and Services By Joshua C. Hall; Joshua Matti; Yang Zhou
  10. Trevor Swan and Indian planning: The lessons of 1958/59 By Selwyn Cornish; Raghbendra Jha
  11. The Fading American Dream: Trends in Absolute Income Mobility Since 1940 By Raj Chetty; David Grusky; Maximilian Hell; Nathaniel Hendren; Robert Manduca; Jimmy Narang
  12. Routine Corruption in Russia During the Reigns of Catherine Ii and Alexander I By Elena Korchmina; Igor Fedyukin
  13. "Change Detection and the Causal Impact of the Yield Curve By Shu-Ping Shi; Stan Hurn; Peter C. B. Phillips
  14. Growth, distribution, and sectoral heterogeneity: reading the Kaleckians in Latin America By Fernando Rugitsky
  15. Reflections on the concept of representation and its application to China By Heberer, Thomas
  16. 'The Effect of Fiscal Policy on Output in Times of Crisis and Prosperity: Historical Evidence From Greece' By George Chouliarakis; Tadeusz Gwiazdowski; Sophia Lazaretou
  17. Technological revolutions and speculative finance: Evidence from the British Bicycle Mania By Quinn, William
  18. Further Unbundling Institutions By Braunfels, Elias
  19. Reconciling Hayek's and Keynes' Views of Recessions By Beaudry, Paul; Galizia, Dana; Portier, Franck
  20. What was the message of Friedman’s Presidential Address to the American Economic Association? By James Forder
  22. Incomplete Contracts and Control By Hart, Oliver
  23. Pay for Performance and Beyond By Holmström, Bengt
  24. The Circulation of Information About the Poll Tax Revenues as an Indicator of Russian Empire Undergoverness in the in the 18th Century By Elena Korchmina
  25. The geography of interstate resource wars By Francesco Caselli; Massimo Morelli; Dominic Rohner
  26. International Great Inflation and Common Monetary Policy By Jacek Suda; Anastasia Zervou
  27. Multiculturalism and Growth: Skill-Specific Evidence from the Post-World War II Period By Frédéric Docquier; Riccardo Turati; Jérôme Valette; Chrysovalantis Vasilakis

  1. By: Gaia Narciso (Department of Economics, Trinity College Dublin); Battista Severgnini (Copenhagen Business School)
    Abstract: This paper studies how cultural norms shaped by negative historical shocks can explain conflicts in the long-run. Exploiting a unique dataset constructed from historical archives, we test whether the Irish Famine (1845-1850), one of the most lethal starvation in history, changed political attitudes and contributed to the Irish Revolution (1913-1921). First, we investigate the determinants of joining the rebellion movement on the basis of the 1911 Irish Census and the official lists of rebels. We find that rebels are more likely to be male, young, catholic and literate. Second, we explore whether the famine played a role in the probability of joining rebellion activities. Controlling for the level of economic development and other potential concurring factors, we provide evidence of the role of the great Irish famine as an exceptional legacy of rebellion during the movement of independence.
    Keywords: Z10, F51, N53, N44.
    Date: 2016–12
  2. By: Bailey, Roy E; Hatton, Timothy J.; Inwood, Kris
    Abstract: Atmospheric pollution was an important side effect of coal-fired industrialisation in the nineteenth century. In Britain emissions of black smoke were on the order of fifty times as high as they were a century later. In this paper we examine the effects of these emissions on child development by analysing the heights on enlistment during the First World War of men born in England and Wales in the 1890s. We use the occupational structure to measure the coal intensity of the districts in which these men were observed as children in the 1901 census. We find strong negative effects of coal intensity on height, which amounts to a difference of almost an inch between the most and least polluted localities. These results are robust to a variety of specification tests and they are consistent with the notion that the key channel of influence on height was via respiratory infection. The subsequent reduction of emissions from coal combustion is one factor contributing to the improvement in health (and the increase in height) during the twentieth century.
    Keywords: atmospheric pollution; health and height
    JEL: I15 N13 Q53
    Date: 2016–12
  3. By: Kanbur, Ravi
    Abstract: The subject of this essay is formed from three classic pieces of writing: The End of Laissez-Faire by John Maynard Keynes, The End of History? by Francis Fukuyama, and The Structure of Scientific Revolutions by Thomas Kuhn. All three essays were concerned with the evolution of ideas, with Keynes and Fukuyama additionally arguing for the centrality of ideas and consciousness in determining material outcomes and government policy. I wish to argue that neither Kuhn’s nor Fukuyama’s “revolutionary” account fits the bill for the path of change in the ideas of political economy. Rather, despite the title of his essay, the gradual and multilayered process described in Keynes’s account of the emergence and then questioning of laissez-faire is a better guide to the likely path of the evolution of this key doctrine of political economy in the coming decades.
    Keywords: Research and Development/Tech Change/Emerging Technologies,
    Date: 2015–03
  4. By: Laura Valladão Mattos
    Abstract: It is argued that J.S.Mill’s position in the debate over the ‘Land Question’ in Ireland can be best understood from the viewpoint of his theory of institutions. He thought that, to be adequate, institutions should promote progress – that is, human improvement, a rise of economic productivity and the increase of social justice – without endangering social order. The prevalent form of land occupation in Ireland – the cottier system – did not fulfil any of these requisites, and was an important obstacle to amelioration. It was at the root of Ireland’s low state of moral and economic development and of the social and political tensions that endangered the social order. Thus, in Mill’s evaluation, it should be eliminated. The alternative of transposing to Ireland the ‘English model’ of capitalist agriculture was, notwithstanding, rejected. This institution could eventually solve the economic problem, but involved the unjust eviction of tenants (aggravating social and political tensions) and would not contribute to the desired regeneration of the Irish character. Given the historical, cultural and political particularities of Ireland, Mill endorsed peasant property as the most suitable form of land appropriation. Its introduction would, at once, improve the character of the people, enhance productivity and increase the degree of social justice of the system. It would also mitigate social and political conflicts that jeopardized social order
    Keywords: J.S.MILL; Ireland; land property; institutions; progress social
    JEL: B12
    Date: 2016–10–21
  5. By: Burton A. Abrams (Department of Economics, University of Delaware); James L. Butkiewicz (Department of Economics, University of Delaware)
    Abstract: In late July, 1971, Nixon reiterated his adamant opposition to wage and price controls calling them a scheme to socialize America. Yet, less than a month later, in a stunning reversal, he imposed the first and only peacetime wage and price controls in U.S. history. The Nixon tapes, personal tape recordings made during the presidency of Richard Nixon, provide a unique body of evidence to investigate the motivations for Nixon’s stunning reversal. We uncover and report in this paper evidence that Nixon manipulated his New Economic Policy to help secure his reelection victory in 1972. He became convinced that wage and price controls were necessary to grab the headlines away from the defeatist abandonment of the Breton Woods Agreement and the closing of the U.S. gold window. Nixon understood the impact of his wage and price controls, but chose to trade off longer-term economic costs to the economy for his own short-term political gain.
    Keywords: Wage and Price Controls; Political Business Cycle; Macroeconomic Policy
    Date: 2016
  6. By: Geoffrey C. Harcourt (School of Economics, UNSW Business School, UNSW)
    Keywords: Keynes, Versailles, King’s, lives of economists and scientists, life philosophy
    JEL: B10 B31 A31
    Date: 2016–11
  7. By: Cristián Larroulet Vignau (School of Business and Economics, Universidad del Desarrollo)
    Keywords: Economic Development; Economic policy; Chile
    Date: 2016
  8. By: Dozie Okoye (Department of Economics, Dalhousie University); Roland Pongou (Department of Economics, University of Ottawa); Tite Yokossi (Department of Economics, MIT)
    Abstract: We examine Fogel’s influential hypothesis that new transportation technologies may be dispensable if pre-existing technologies are viable or can simply be improved. Exploiting the construction of colonial railroads in Nigeria, we find that the railway has large long-lasting impacts on individual and local development in the North, but virtually no impact in the South neither in the short run nor in the long run. This heterogeneous impact of the railway can be accounted for by the level of pre-railway access to ports of export. Consistent with Fogel’s argument, the railway did not transform areas that had viable transportation alternatives for exporting purposes. Using information on changes in shipping costs and quantities, we highlight the importance of opportunity costs to the adoption and impact of new transportation investments.
    Keywords: Fogel’s Hypothesis, Colonial Investments, Railway, Africa, Development, Nigeria
    JEL: I20 N30 N37 N47 O15 Z12
    Date: 2016
  9. By: Joshua C. Hall (West Virginia University, Department of Economics); Joshua Matti (West Virginia University, Department of Economics); Yang Zhou (West Virginia University, Department of Economics)
    Abstract: The United States has a rich history of local government taxation and good provision. The last fifty years, however, have seen increasing calls for the regionalization of municipal taxes and services from policymakers. Arguments for greater regionalization emphasize improved efficiency, enhanced equity, mitigation of spillovers, and improved economic development. A number of localist scholars have responded to regionalists’ concerns. This review articulates regionalists’ arguments, the localists’ response, and then summarizes the relevant empirical literature to see which side’s theories hold forth in the data.
    Keywords: local governments, Bloomington School, regionalism, localism
    JEL: H11 H70 H71 H77
    Date: 2016–12
  10. By: Selwyn Cornish; Raghbendra Jha
    Abstract: Trevor Swan is commonly considered to be Australia’s most distinguished economist. As part of a visiting professorship at MIT during 1958-59 he spent nine months in India to assist in the formulation of India’s third five year plan and to contribute to the development of India’s premier research institutions. This paper provides an account of his work in New Delhi. Swan’s closest associates were Pitambar Pant from the Indian Planning Commission and Ian Little who was visiting from Oxford. Swan was of the view that India’s economic problems should be clearly understood and the best policy measures to address these should be devised. This varied considerably from the practice of central planning and state control being practiced in India at that time. Swan was unable to influence the direction of economic policy in India but the economy’s subsequent performance would vindicate Swan’s views on how economic development policy should have been conducted.
    Keywords: India, Trevor Swan, Ian Little, Pitambar Pant, Five Year Plans, MIT Project, Ford Foundation
    JEL: B19 B31 O10 O21
    Date: 2016
  11. By: Raj Chetty; David Grusky; Maximilian Hell; Nathaniel Hendren; Robert Manduca; Jimmy Narang
    Abstract: We estimate rates of “absolute income mobility” – the fraction of children who earn more than their parents – by combining historical data from Census and CPS cross-sections with panel data for recent birth cohorts from de-identified tax records. Our approach overcomes the key data limitation that has hampered research on trends in intergenerational mobility: the lack of large panel datasets linking parents and children. We find that rates of absolute mobility have fallen from approximately 90% for children born in 1940 to 50% for children born in the 1980s. The result that absolute mobility has fallen sharply over the past half century is robust to the choice of price deflator, the definition of income, and accounting for taxes and transfers. In counterfactual simulations, we find that increasing GDP growth rates alone cannot restore absolute mobility to the rates experienced by children born in the 1940s. In contrast, changing the distribution of growth across income groups to the more equal distribution experienced by the 1940 birth cohort would reverse more than 70% of the decline in mobility. These results imply that reviving the “American Dream” of high rates of absolute mobility would require economic growth that is spread more broadly across the income distribution.
    JEL: H0 J0
    Date: 2016–12
  12. By: Elena Korchmina (National Research University Higher School of Economics); Igor Fedyukin (National Research University Higher School of Economics)
    Abstract: This articles uses the account records books from a variety of Golitsyn estates in the late eighteenth- early ninetieth century to assess the level of "routine corruption" in Imperial Russia. The data from these books allows us to identify individual cases of unofficial payments made by the estates and by peasant commune to the district-level officials; to delimit key types of payment situations; and to calculate the overall volumes of payments. The resulting numbers are compared to the overall volume of obligations carried by the serfs to the state and toothier landlords. Our conclusion is that while the routine unofficial payments were ubiquitous and accompanied any interaction with the state, by the time of Catherine II's reign their volume l was quite low and did not put significant burden on the population. Rather, officials made fortunes by extracting unofficial payments in more targeted ways
    Keywords: Russia, corruption, bureaucracy, peasants, Golitsyns, gift-giving
    JEL: Z
    Date: 2016
  13. By: Shu-Ping Shi (Macquarie University); Stan Hurn (Queensland University of Technology - School of Economics and Finance); Peter C. B. Phillips (Cowles Foundation, Yale University)
    Abstract: This paper re-examines changes in the causal link between money and income in the United States for over the past half century (1959 - 2014). Three methods for the data-driven discovery of change points in causal relationships are proposed, all of which can be implemented without prior detrending of the data. These methods are a forward recursive algorithm, a recursive rolling algorithm and the rolling window algorithm all of which utilize subsample tests of Granger causality within a lag-augmented vector autoregressive framework. The limit distributions for these subsample Wald tests are provided. The results from a suite of simulation experiments suggest that the rolling window algorithm provides the most reliable results, followed by the recursive rolling method. The forward expanding window procedure is shown to have worst performance. All three approaches find evidence of money-income causality during the Volcker period in the 1980s. The rolling and recursive rolling algorithms detect two additional causality episodes: the turbulent period of late 1960s and the starting period of the subprime mortgage crisis in 2007.
    Keywords: Time-varying Granger causality, subsample Wald tests, Money-Income
    JEL: C12 C15 C32 E47
    Date: 2016–12
  14. By: Fernando Rugitsky
    Abstract: The aim of this paper is to explore a parallelism between two episodes in the history of economic thought in order to suggest that the interaction between them can contribute to the research on Kaleckian growth and distribution models. First, a brief summary of the theoretical development from Steindl’s stagnationist claims to the debate about demand regimes is offered. Then, a more detailed account is provided of the Latin American debate that began with Furtado’s stagnationist claims and resulted in the formulation of models of social articulation and disarticulation. Finally, an analytical classification of Kaleckian and Latin American growth and distribution models is provided, indicating the way in which sectoral heterogeneity and demand composition can act as a plausible link between growth and distribution.
    Keywords: income distribution; demand regimes; sectoral heterogeneity; demand composition; distributive schedule.
    JEL: E11 E20 O11
    Date: 2016–10–26
  15. By: Heberer, Thomas
    Abstract: This paper presents both a literature review on the issue of political representation and the preliminary framework of a sub-project on new political claims of representation in China. It is primarily concerned with portraying and typing diverse schools of thought in both a "Western" and a Chinese context, while the sub-project is part of the French-German Joint Cooperation Project "New Political Representative Claims: A Global View: France, Germany, Brazil, China, India". The paper is organized as follows: (1) The concept of representation is examined by a brief review of the history of this concept, including the existence of two diverging strands of representation in "Western" discourses. (2) We then examine the meanings of representation, its definitions, and its peculiarities. Points (1) and (2) in particular are based on a literature review. (3) We discuss the issue of representation in a non-democratic, authoritarian setting in general and in China specifically in light of the fact that almost no literature on representation in authoritarian polities exists. (4) We outline the Chinese domestic discourse on political representation. (5) Finally, we clarify the distinction between political representation and participation on the one hand and elections as a specific feature of representation on the other. We then conclude with a summary of our preliminary findings.
    Keywords: representation,representation in an authoritarian context,representation in China,Chinese discourses on representation,participation,elections
    Date: 2016
  16. By: George Chouliarakis; Tadeusz Gwiazdowski; Sophia Lazaretou
    Abstract: Empirical analysis of a unique and unexplored historical dataset for Greece provides new insight into the state and regime dependence of the government spending multiplier. Greece fought numerous wars between the establishment of the modern Greek state and the outbreak of World War II. Using data for both armament and disarmament, and controlling for states and regimes in the economy, our empirical findings suggest that the exchange rate regime, the presence of exchange controls, and the business cycle all have a significant impact on the size of the government spending multiplier. However, analysing the interaction of these states and regimes turns out to be crucial to removing the bias from our multiplier estimates. In particular, regardless of other states and regimes in the economy, the multiplier is estimated to be zero during good times. In contrast, it is well above unity when spending decreases in a recession.
    Date: 2016
  17. By: Quinn, William
    Abstract: Technological revolutions are often accompanied by substantial stock price reversals, but previous literature has produced competing explanations for why this is the case. This paper brings new evidence to this debate using data from the innovation-driven British Bicycle Mania of 1895-1900, in which cycle share prices rose by over 200 per cent before collapsing by more than 75 per cent. These price patterns are not fully explained by fundamentals or by changes in the nature of risk associated with cycle shares. Instead, the evidence from the Bicycle Mania supports the hypothesis of Perez (2009), who argues that new technology, high short-term profits, and loose monetary conditions increase the level of speculative investment, "decoupling" share prices from fundamentals.
    Keywords: technology,innovation,historical stock markets,asset price reversals
    JEL: G19 N23 O39
    Date: 2016
  18. By: Braunfels, Elias (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper analyzes the effects of institutions on economic development, and focuses on separating political institutions from contracting and economic institutions. For a sample of former European colonies, I find that differences in income levels are strongly a ected by political institutions, which regulate political accountability and constrain political elites. There is some evidence for a positive e ect of economic institutions, which protect property rights, but no evidence for positive e ects of contracting institutions, which facilitate contracting among individuals. A decomposition of GDP reveals that political institutions work through the channel of physical and human Capital accumulation. Economic institutions have a positive impact on total factor productivity. To identify and unbundle effects, I exploit exogenous variation in each of the three institutions using instrumental variables based on Colonial history and geographic endowments. The application of a recently developed test for weak instruments in the multiple endogenous variables setting shows that the e ects of institutions can be separated. The paper adds to the literature by identifying the fundamental importance of political institutions for economic development, and provides an inside into the channels through which speci c institutions a ect income levels.
    Keywords: Institutions; Economic Development; Political Economy; Property Rights; Checks and Balances
    JEL: E02 O11 O17 O43
    Date: 2016–09–19
  19. By: Beaudry, Paul; Galizia, Dana; Portier, Franck
    Abstract: Recessions often happen after periods of rapid accumulation of houses, consumer durables and business capital. This observation has led some economists, most notably Friedrich Hayek, to conclude that recessions often reflect periods of needed liquidation resulting from past over-investment. According to the main proponents of this view, government spending or any other form of aggregate demand policy should not be used to mitigate such a liquidation process, as doing so would simply result in a needed adjustment being postponed. In contrast, ever since the work of Keynes, many economists have viewed recessions as periods of deficient demand that should be countered by activist fiscal policy. In this paper we reexamine the liquidation perspective of recessions in a setup where prices are flexible but where not all trades are coordinated by centralized markets. The model illustrates why liquidations likely cause recessions characterized by deficient aggregate demand and accordingly suggests that Keynes' and Hayek's views of recessions may be closely linked. In our framework, interventions aimed at stimulating aggregate demand face a trade-off whereby current stimulus postpones the adjustment process and therefore prolongs the recessions, but where some stimulative policies may nevertheless remain desirable.
    Keywords: Business Cycle, Unemployment, Liquidations
    JEL: E32
    Date: 2016–11
  20. By: James Forder
    Abstract: Abstract It is widely accepted that the importance of Friedman’s Presidential Address to the American Economic Association lies in its criticism of policy based on the Phillips curve. It is argued that a reading of the text does not support such a view, and this and other considerations suggest that any such aim was far from Friedman’s mind in 1968. His objective was the quite different one of making a case for policy ‘rules’ rather than discretion.
    Keywords: Milton Friedman; rules and discretion; expectations; Phillips curve
    JEL: B22 B31 E58
    Date: 2016–12–13
  21. By: Kanbur, Ravi
    Abstract: All those who know Ghana know about the association of Nobel Laureate W. Arthur Lewis with the country’s economic policy making before independence and in its early years as a free nation. But there is less appreciation in development economics more generally of the central role that Ghana played in Lewis’s thinking as a development economist, and there is less appreciation among Ghanaians of how the Ghana experience left an indelible mark on Lewis in the second half of his career. In this sixtieth year of Ghana’s independence, this paper attempts to set out the deep connections between this giant of development economics and the evolution of Ghanaian Economic Policy.
    Keywords: Agricultural and Food Policy,
    Date: 2016–04
  22. By: Hart, Oliver (Harvard University)
    Abstract: Oliver Hart delivered his Prize Lecture on 8 December 2016 at the Aula Magna, Stockholm University.
    Keywords: Contract Theory;
    JEL: D86
    Date: 2016–12–08
  23. By: Holmström, Bengt (MIT)
    Abstract: Bengt Holmström delivered his Prize Lecture on 8 December 2016 at the Aula Magna, Stockholm University.
    Keywords: Contract theory;
    JEL: D86
    Date: 2016–12–08
  24. By: Elena Korchmina (National Research University Higher School of Economics)
    Abstract: The article deals with the notion “undergoverness” in the context of the 18th century Russia. It was an attempt to get away from the general discussion based on the number of state officials per capita.The study is devoted to the analysis of the poll tax collection mechanism. We use the new data about regional variations in the number of officials responsible for the poll tax collection. The poll tax collection chain may be split into two relatively connected procedures: the first – money gathering, distribution and delivery (let’s name it a material layer); the second – making reports on cash inflaws and outflaws (let it called an informational layer). The same state officialdom – provincial, regional and local clerks – was in charge of appropriate commitment of both procedures. The results at the first level should be recognized as successful (the collection of the poll tax was about 95%). But the activities of government officials, aimed at informing the government, was close to collapse. So the idea of determining the level of undergoverness through the ratio of officials to the population looks doubtful. It is important to arrange what we mean by the state management: the actual availability of the state to collect and spend money or the knowledge of the state, "St. Petersburg", about what happened to its money?
    Keywords: information, Russia, 18th century, undergoverness, bureaucrats
    JEL: Z
    Date: 2016
  25. By: Francesco Caselli; Massimo Morelli; Dominic Rohner
    Abstract: We establish a theoretical and empirical framework to assess the role of resource endowments and their geographic location in interstate conflict. The main predictions of the theory are that conflict is more likely when at least one country has natural resources, when the resources in the resource-endowed country are closer to the border, and, in the case where both countries have natural resources, when the resources are located asymmetrically vis-à-vis the border. We test these predictions on a novel data set featuring oilfield distances from bilateral borders. The empirical analysis shows that the presence and location of oil are significant and quantitatively important predictors of interstate conflicts after World War II.
    JEL: J1
    Date: 2015
  26. By: Jacek Suda (Narodowy Bank Polski); Anastasia Zervou (Texas A&M University, Department of Economics)
    Abstract: We study whether monetary authorities in the G7 countries were changing their responses to inflation in a similar manner during and following the Great Inflation era. We find that the common to the G7 countries inflation pattern during the Great Inflation period could be associated with a common pattern in the monetary policy response to inflation: we find that until the early 1980s monetary authorities in the G7 countries responded mildly to inflation, systematically fought it throughout the 1980s and lessened again their response during the 2000s. The estimated Taylor rule coefficients on inflation are cointegrated, implying the existence of a long run relation- ship in the responses to inflation during and after the Great Inflation period. At the same time, principal component analysis of the residuals of the estimated Taylor rules indicates that the shocks’ structure cannot account enough for the monetary policies’ comovements. We interpret these findings as suggestive of common monetary policy patterns.
    Keywords: International Monetary Policy, International Great Inflation, Time Varying Parameter Model
    JEL: E52 E58 C22
    Date: 2016–05–13
  27. By: Frédéric Docquier (FNRS, UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FERDI (France)); Riccardo Turati (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Jérôme Valette (CERDI, University of Auvergne (France)); Chrysovalantis Vasilakis (Bangor Business School (United Kingdom))
    Abstract: This paper empirically revisits the impact of multiculturalism (as proxied by indices of birthplace diversity and polarization among immigrants, or by epidemiological terms) on the macroeconomic performance of US states over the 1960-2010 period. We test for skill-specific effects of multiculturalism, controlling for standard growth regressors and a variety of fixed effects, and accounting for the age of entry and legal status of immigrants. To identify causation, we compare various instrumentation strategies used in the existing literature. We provide converging and robust evidence of a positive and significant effect of diversity among college-educated immigrants on GDP per capita. Overall, a 10% increase in high-skilled diversity raises GDP per capita by 6.2%. On the contrary, diversity among less educated immigrants has insignificant effects. Also, we find no evidence of a quadratic effect or a contamination by economic conditions in poor countries.
    Keywords: Immigration, Culture, Birthplace Diversity, Growth
    JEL: F22 J61
    Date: 2016–12–06

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