nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2017‒07‒23
seventeen papers chosen by
Bernardo Bátiz-Lazo
Bangor University

  1. The Slaughter of the North American Bison and Reversal of Fortunes on the Great Plains By Donna Feir,Rob Gillezeau, Maggie Jones
  2. "Disentangling the Effects of Technological and Organizational Changes in the Rise of the Factory: The Case of the Japanese Fabric Industry, 1905-1914" By Tetsuji Okazaki
  3. Divergence, convergence, and the history-augmented Solow model By Kufenko, Vadim; Prettner, Klaus; Geloso, Vincent
  4. Geopolitics and Asia’s Little Divergence: State Building in China and Japan After 1850 By KOYAMA, Mark; MORIGUCHI, Chiaki; SNG, Tuan-Hwee
  5. Productivity, Taxes, and Hours Worked in Spain: 1970–2015 By Juan Carlos Conesa; Timothy J. Kehoe
  6. The Impact of Immigration on Wage Dynamics: Evidence from the Algerian Independence War By Anthony Edo
  7. Law enforcement and political participation: Italy, 1861-65 By Antonio Accetturo; Matteo Bugamelli; Andrea Lamorgese
  8. Labor Supply in the Future: Who Will Work? By Per Krusell; Jonna Olsson; Timo Boppart
  9. Dynamic Comparative Advantage in International Shipbuilding: The Transition from Wood to Steel By William Hanlon
  10. Making Direct Democracy Work. An economic perspective on the graphe paranomon in ancient Athens By Lyttkens, Carl Hampus; Tridimas, George; Lindgren, Anna
  11. Population Control Policies and Fertility Convergence By Tiloka de Silva; Silvana Tenreyro
  12. Date-stamping US housing market explosivity By Balcilar, Mehmet; Katzke, Nico; Gupta, Rangan
  13. The Role of Term Spread and Pattern Changes in Predicting Stock Returns and Volatility of the United Kingdom: Evidence from a Nonparametric Causality-in-Quantiles Test Using Over 250 Years of Data By Rangan Gupta; Marian Risse; David A. Volkman; Mark E. Wohar
  14. Rural "Italies" and the great crisis. Provincial clusters in italian agriculture between the two world wars By Francesco Chiapparino; Gabriele Morettini; Fabrizio Muratore
  15. Development models, agricultural policies, and agricultural growth: Peru, 1950-2010 By Jackeline Velazco; Vicente Pinilla
  16. The effects of adult and non-adult mortality on long-run economic development: Evidence from a heterogeneous dynamic and cross-sectionally dependent panel of countries between 1800 and 2010 By Herzer, Dierk; Nagel, Korbinian
  17. Towards a Political Theory of the Firm By Luigi Zingales

  1. By: Donna Feir,Rob Gillezeau, Maggie Jones (Department of Economics, University of Victoria)
    Abstract: In the late-19th century, the North American Bison was slaughtered in a dramatic near-extinction episode that occurred in a period of just over ten years. We argue that the rapidity of this slaughter led to a “reversal of fortunes” for the Native American societies that were built on the bison. We exploit regional variation in the speed at which the bison were slaughtered and tribal variation in bison-dependence to show that bison-dependent Native American tribes suffered a significant change in living standards immediately after the bison's near-extinction, as measured by changes in height. Once the tallest people in the world, the generations of bison-dependent people born after the slaughter were amongst the shortest. We show that these effects persist into the present. Previously bison-dependent societies have persistently worse living conditions compared to the average Native American nation, with between 20-40% less income per capita today, and this effect is strongest among the least historically diverse economies. Our results are robust to the inclusion of cultural, colonial, and geographic factors and hold in both Canada and the United States. While the relative living conditions of historically bison-dependent nations improved modestly between 1910 and 2010, as measured by standardized occupational rank, outcomes remain lower than non-bison-dependent nations, particularly for those living on Native American reservations. We suggest that the restrictions on mobility and economic diversification that were placed on Native Americans by federal Indian policy during the 19th and 20th centuries likely hampered the ability of these economies to adjust in the long-run.
    Keywords: North American Bison, Buffalo, Extinction, Economic History, Development, Displacement, Native Americans, Indigenous, Income Shock, Intergenerational Mobility
    JEL: I15 J15 J24 N31 N32
    Date: 2017–07–09
  2. By: Tetsuji Okazaki (Graduate School of Economics, The University of Tokyo)
    Abstract: This paper attempts to contribute to the "factory debate" by disentangling the effects of the technological change and the organizational change in the rise of the factory, using a unique dataset from Japan in the early twentieth century. It is found that the productivity of a factory worker was 2.46 times larger than that of an outworker under the putting-out system, after controlling for the effect of the power loom. The impact of the factory system was almost as large as that of the power loom in the case where all the hand looms were replaced by power looms. This finding indicates how substantial the effect of the organizational change was that gathered dispersed workers under the one roof.
    Date: 2017–07
  3. By: Kufenko, Vadim; Prettner, Klaus; Geloso, Vincent
    Abstract: We test the history-augmented Solow model with respect to its predictions on the patterns of divergence and convergence between the nowadays industrialized countries of the OECD. We show that the dispersion of incomes increased after the Industrial Revolution, peaked during the Second World War, and decreased afterwards. This pattern is fully consistent with the transitional dynamics implied by the history-augmented Solow model.
    Keywords: history-augmented Solow model,divergence,convergence,cross-country inequality
    JEL: J11 O11 O47
    Date: 2017
  4. By: KOYAMA, Mark; MORIGUCHI, Chiaki; SNG, Tuan-Hwee
    Abstract: We provide a new framework to account for the diverging paths of political development in China and Japan during the late nineteenth century. The arrival of Western powers not only brought opportunities to adopt new technologies, but also fundamentally threatened the sovereignty of both countries. These threats and opportunities produce an unambiguous impetus toward centralization and modernization for small states, but place conflicting demands on larger states. We use our theory to study why China, which had been centralized for much of its history, experienced gradual disintegration upon the Western arrival, and how Japan rapidly unified and modernized.
    Keywords: China, Japan, Geopolitics, State Capacity, Political Fragmentation, Political Centralization, Economic Modernization
    Date: 2017–07
  5. By: Juan Carlos Conesa; Timothy J. Kehoe
    Abstract: In the early 1970s, hours worked per working-age person in Spain were higher than in the United States. Starting in 1975, however, hours worked in Spain fell by 40 percent. We find that 80 percent of the decline in hours worked can be accounted for by the evolution of taxes in an otherwise standard neoclassical growth model. Although taxes play a crucial role, we cannot argue that taxes drive all of the movements in hours worked. In particular, the model underpredicts the large decrease in hours in 1975–1986 and the large increase in hours in 1994–2007. The lack of productivity growth in Spain during 1994–2015 has little impact on the model’s prediction for hours worked.
    JEL: C68 E13 E24 H31
    Date: 2017–07
  6. By: Anthony Edo
    Abstract: This paper investigates the dynamics of wage adjustment to an exogenous increase in labor supply by exploiting the sudden and unexpected inflow of repatriates to France created by the independence of Algeria in 1962. I track the impact of this particular supply shift on the average wage of pre-existing native workers across French regions in 1962, 1968 and 1976. I find that regional wages decline between 1962 and 1968, before returning to their pre-shock level 15 years after. While regional wages recovered, this particular supply shock had persistent distributional effects. By increasing the relative supply of high educated workers, the inflow of repatriates contributed to the reduction of wage inequality between high and low educated native workers over the whole period considered (1962-1976).
    Keywords: Labor Supply Shock,;Wages;Immigration;Natural Experiment.
    JEL: F22 J21 J61
    Date: 2017–07
  7. By: Antonio Accetturo (Bank of Italy); Matteo Bugamelli (Bank of Italy); Andrea Lamorgese (Bank of Italy)
    Abstract: Does tougher law enforcement positively affect political participation? This paper addresses this question, which hinges upon the causal impact of formal institutions on informal ones, by using a historical event from 19th century Italy. This event was the Pica Law, which was introduced in 1863 to fight a surge of criminal violence in Southern Italy and to ensure a safer environment for wealthy people, the only ones allowed to vote at that time. Our main finding, obtained using a spatial regression discontinuity technique in a diff-in-diffs framework, is that voter turnout greatly increased in those areas where the Pica Law was applied, compared with bordering and otherwise similar areas. This result is confirmed by a number of robustness checks and placebo exercises and turns out to be persistent over time.
    Keywords: turnout, electoral results, spatial discontinuity
    JEL: D72 R5
    Date: 2017–07
  8. By: Per Krusell (Stockholm University); Jonna Olsson (IIES, Stockholm University); Timo Boppart (IIES, Stockholm University)
    Abstract: Evidence on hours worked per capita from historical time series as well as from a large cross-section of countries at different income levels strongly suggests that the income effect of increased labor productivity exceeds the substitution effect. To the extent that productivity keeps growing in the future, we should then expect people to want to work less and less. Given that labor-force participation is associated with natural indivisibilities, our perspective must furthermore imply that a smaller and smaller fraction of the population will be working. So who will then withdraw from the labor force, and when? This paper examines these questions in a frictionless setting where consumers/workers at any point in time differ in wealth and in productivity. It also addresses the normative issue: who should (given some welfare weights) work in the future?
    Date: 2017
  9. By: William Hanlon (UCLA)
    Abstract: Can temporary initial input cost advantages have a long-run impact on the spatial distribution of production and trade? I study this question in the context of the international shipbuilding industry during the transition from wood to metal ship production (1850-1912). Input price advantages gave Britain an early lead in metal shipbuilding, while the U.S. and Canada specialized in wood ship production. However, after 1890, Britain's initial price advantages disappeared. By comparing production patterns on the Atlantic Coast of North America, which faced British competition, to the Great Lakes, which were isolated from competition, I show that British competition substantially reduced the ability of North American producers to transition to metal ship production. I also exploit additional sources of variation to show how government protection and support moderated these effects for some Atlantic Coast producers, allowing them to survive the demise of wood shipbuilding. Finally, I provide evidence that the mechanism driving the persistence of Britain's lead was the development of large pools of skilled craft workers. These results shed light on the role of past conditions in influencing current production and trade patterns and with implications for the use of industrial policy and tariff protection.
    Date: 2017
  10. By: Lyttkens, Carl Hampus (Department of Economics, Lund University); Tridimas, George (Department of Accounting, Finance and Economics, Ulster University); Lindgren, Anna (Centre for Mathematical Sciences, Lund University)
    Abstract: The specific way the Athenians set up their democracy presents both theoretical and empirical challenges. Decisions were taken by majority vote in the Assembly. To keep politicians in line, the Athenians first used ostracism, which however was replaced by the graphe paranomon around 415 BCE. The latter provided that anybody who had made a proposal in the Assembly could be accused of having made an unconstitu¬tional suggestion, bringing a severe penalty if found guilty. We know of 35 such cases between 403 and 322. During the fourth century the notion of illegality was extended to a mere question of undesirability. Henceforth any decision by the Assembly could be overturned by the courts, but if the accuser failed to get at least 20% of the jury votes, he was punished instead. While these rules can be seen as a safeguard against bad decisions, they also provided the Athenian politicians with important information about the relative strength of their political support. This effect has not been analysed before, and it may help explain the relative stability of political life in classical Athens. Furthermore this analysis also contributes to our understanding of a curious but often overlooked fact, namely that the decrees of the Athenian Assembly to a great extent concerned honorary rewards, and the use of the graphe paranomon in turn was largely focussed on the honorary decrees.
    Keywords: Ancient Athens; graphe paranomon; direct democracy; judicial review; voter; information; political stability; jury composition
    JEL: H10 N40 N43
    Date: 2017–07–14
  11. By: Tiloka de Silva (London School of Economics (LSE); Centre for Macroeconomics (CFM)); Silvana Tenreyro (London School of Economics (LSE); Centre for Macroeconomics (CFM); Centre for Economic Performance (CEP); The Centre for Economic Policy Research (CEPR))
    Abstract: The rapid population growth in developing countries in the middle of the 20th century led to fears of a population explosion and motivated the inception of what effectively became a global population-control program. The initiative, propelled in its beginnings by intellectual elites in the United States, Sweden, and some developing countries, mobilized resources to enact policies aimed at reducing fertility by widening contraception provision and changing family-size norms. In the following five decades, fertility rates fell dramatically, with a majority of countries converging to a fertility rate just above two children per woman, despite large cross-country differences in economic variables such as GDP per capita, education levels, urbanization, and female labour force participation. The fast decline in fertility rates in developing economies stands in sharp contrast with the gradual decline experienced earlier by more mature economies. In this paper, we argue that population-control policies are likely to have played a central role in the global decline in fertility rates in recent decades and can explain some patterns of that fertility decline that are not well accounted for by other socioeconomic factors.
    Keywords: Fertility rates, Birth rate, Convergence, Macro-development, Malthusian growth, Population, Population-control policies
    Date: 2017–04
  12. By: Balcilar, Mehmet; Katzke, Nico; Gupta, Rangan
    Abstract: In this paper, the authors set out to date-stamp periods of US housing price explosivity for the period 1830-2013. They make use of several robust techniques that allow them to identify such periods by determining when prices start to exhibit explosivity with respect to its past behaviour and when it recedes to long term stable prices. The first technique used is the Generalized sup ADF (GSADF) test procedure developed by Phillips, Shi, and Yu (Testing for Multiple Bubbles: Historical Episodes of Exuberance and Collapse in the S&P 500, 2013), which allows the recursive identification of multiple periods of price explosivity. The second approach makes use of Robinson's (Efficient Test of Nonstationary Hypotheses, 1994) test statistic, comparing the null of a unit root process against the alternative of speced orders of fractional integration. The analysis date-stamps several periods of US house price explosivity, allowing us to contextualize its historic relevance.
    Keywords: GSADF,bubble,structural breaks,Random Walk,explosivity,recursive process
    JEL: C22 G15 G14
    Date: 2017
  13. By: Rangan Gupta (University of Pretoria); Marian Risse (Helmut Schmidt University); David A. Volkman (University of Nebraska at Omaha); Mark E. Wohar (University of Nebraska-Omaha and Loughborough University)
    Abstract: Given the existence of nonlinear relationship between equity premium and term spread, as well as pattern changes and the interaction of pattern changes with the term-spread and changes in the shape of the yield curve, we use a nonparametric k-th order causality-in-quantiles test to predict the movement in excess returns and volatility based on changes in the shape of the yield curve. With the test applied to over 250 years of monthly data for the UK covering the period 1753:08 to 2017:02, we find that pattern changes and the interaction of pattern changes with the term-spread, besides the term spread itself, tends to also play an important role in predicting volatility at the upper end of its conditional distribution. In addition, the effect on excess returns from term spread, pattern changes and the interaction is found to have improved markedly over time, barring at the conditional median of the equity premium. Finally, comparisons are made with historical data of the US and South Africa, and implications of our results are discussed.
    Keywords: Stock returns, volatility, yield curve changes, conditional term spreads, nonparametric causality-in-quantiles test
    JEL: C22 G14 G18 E43 E44
    Date: 2017–07
  14. By: Francesco Chiapparino (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Gabriele Morettini (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); Fabrizio Muratore (Universita' Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: This contribution aims to investigate the dynamics of Italian agriculture during the crisis of the Thirties, as well as related issues such as the role of some policies deployed to contain the recession and their consequences. To that end, the paper adopts a particular viewpoint based on the belief that Italy presents a large variety of rural environments, the result of its geography and history, and is characterized by different cultivations, features, conduction systems, productivity levels, and market orientations - in other words, diverse modes of production. Partitioning these "rural Italies" allows us to analyze their trends and prevents them from being bundled together in such a way as to compensate and sometimes even nullify each other. Moreover, the Fascist regime introduced active incentive and protectionist (even autarkic) policies to contrast the recession. Split into the plurality of its agrarian contexts, therefore, the country becomes a sort of kaleidoscope, through which it is possible to observe both the relatively wide set of effective changes brought about by the depression and the diverse impact of national policies.
    Keywords: Crisis, Italy, (Agrarian) Clusters, Fascism, Yields
    Date: 2017–07
  15. By: Jackeline Velazco; Vicente Pinilla
    Abstract: Throughout its history, Peru, as a small open economy, has undergone cycles of crisis and recovery, usually linked to fluctuations in the international market. The Peruvian economy has always been an exporter of primary products and an importer of manufactured goods This paper has a two-fold aim: to identify the salient characteristics of the development models and policies affecting Peruvian agriculture since the mid-twentieth century, and to identify what effect they have had on agricultural production and productivity based on an estimation of total-factor productivity (TFP) for the 1950-2010 period.Development strategy models have ranged from the diversification of primary exports, to import-substitution industrialisation, and the promotion of non-traditional exports, which is the current model. These strategies have determined the outcome for agriculture.
    Keywords: Peruvian economic history, Peruvian agriculture, development models, Latin American economic history, agricultural growth
    JEL: N56 O47 Q54 Q10
    Date: 2017–07
  16. By: Herzer, Dierk (Helmut Schmidt University, Hamburg); Nagel, Korbinian (Helmut Schmidt University, Hamburg)
    Abstract: This study examines the effects of adult and non-adult mortality on the long-run level of income in a heterogeneous dynamic and cross-sectionally dependent panel. Employing data for 20 countries between 1800 and 2010, it is found that (i) while non-adult mortality has no long-run effect on GDP per capita, reductions in adult mortality lead to statistically and economically significant increases in the long-run level of per capita income; (ii) there are no significant differences in the long-run effects of adult mortality and non-adult mortality on GDP per capita before and after the onset of the demographic transition; and (iii) mortality in middle adulthood has the greatest impact on economic development, whereas early adulthood mortality and mortality in later adulthood have little to no impact on the long-run level of per capita income.
    Keywords: Life expectancy; Adult mortality; Non-adult mortality; Economic development; Heterogeneous panel data models; Cross-sectional dependence; Demographic transition
    JEL: C23 I15 J11 O11
    Date: 2017–07–13
  17. By: Luigi Zingales
    Abstract: Neoclassical theory assumes that firms have no power of fiat any different from ordinary market contracting, thus a fortiori no power to influence the rules of the game. In the real world, firms have such power. I argue that the more firms have market power, the more they have both the ability and the need to gain political power. Thus, market concentration can easily lead to a “Medici vicious circle,” where money is used to get political power and political power is used to make money.
    JEL: G3
    Date: 2017–07

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