nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2019‒12‒02
forty-five papers chosen by

  1. Journal of the History of Economic Thought Preprints - Economic Analysis of Education in Post-War America: New insights from Theodore Schultz and John Kenneth Galbraith By CHIRAT, alexandre; , Le Chapelain Charlotte
  2. Antitrust and Economic History: The Historic Failure of the Chicago School of Antitrust By Mark Glick
  3. The Puzzle of Industrial Enterprises in Romania over a Century: 1918-2017 By Chivu, Luminita
  4. The Emergence of Big Gods in the Ancient Mediterranean By Kaše, Vojtěch
  5. Making Identity Count: UK 1960 By Vucetic, Srdjan
  6. Hidden wealth By Cummins, Neil
  7. Instruments of Debtstruction: Public Debt Management and Networks during the Interwar Period By Nicolas End; Marina Marinkov; Fedor Miryugin
  8. Portugal adoption of the gold standard: political reasons for a monetary choice (1846-1854) By Rita Martins de Sousa
  10. Long run relationship between biological well being, and economic development in Colombia By Meisel-Roca, Adolfo; Ramírez-Giraldo, María Teresa; Santos-Cárdenas, Daniela
  11. The Wife's Protector: A Quantitative Theory Linking Contraceptive Technology with the Decline in Marriage By Greenwood, Jeremy; Guner, Nezih; Kopecky, Karen A.
  12. The Melting-Pot Problem? The Persistence and Convergence of Premigration Socioeconomic Status During the Age of Mass Migration By Catron, Peter
  13. A evolução da economia do desenvolvimento: ensaio sobre o caso português By Carlos Bastien; Ana Bela Nunes
  14. The discourse of competitiveness and the dis-embedding of the national economy By Linsi, Lukas
  16. Journal of the History of Economic Thought Preprints – Review of Nature in the History of Economic Thought: how natural resources became an economic concept By Franco, Marco Paulo Vianna
  17. A different perspective on the evolution of UK income inequality By Atkinson, A. B.; Jenkins, Stephen P.
  18. A century of economics and engineering at Stanford By Cherrier, Beatrice; Saïdi, Aurélien
  19. Trends in Education Mobility Across Time and Place in the Early 20th Century US By Fletcher, Jason
  20. Journal of the History of Economic Thought Preprints – review of Kurz 'Economic Thought: A Brief History' By Andrews, David
  21. Water Purification Efforts and the Black-White Infant Mortality Gap, 1906-1938 By Anderson, D. Mark; Charles, Kerwin Kofi; Rees, Daniel I.; Wang, Tianyi
  22. Populism - What next? A first look at populist walking-stick economies By Christopher Ball; Andreas Freytag; Miriam Kautz
  23. Inequality in the 21st Century:A Critical Analysis of Piketty`s Work By Nadia Garbellini
  24. The Focus of Academic Economics: Before and After the Crisis By Ernest Aigner; Matthias Aistleitner; Florentin Glotzl; Jakob Kapeller
  25. Becoming White: How Military Service Turned Immigrants into Americans By Mazumder, Soumyajit
  26. Height, nutrition and the side production of sericulture and carp feeding in modern rural Japan(1) aggregate data analysis:the case of Zakouji-village, Shimo-Ina gun, Nagano, 1880s-1930s By Kenichi Tomobe; Takako Kimura; Keisuke Moriya
  27. Rhetorics of Radicalism By Karell, Daniel; Freedman, Michael Raphael
  28. Settlement Location Shapes Refugee Integration: Evidence from Post-War Germany By Braun, Sebastian Till; Dwenger, Nadja
  29. The sociological imagination and media studies in neoliberal times By Orgad, Shani
  30. Mirrors of Capitalist Modernization in Turkey: Review of Adalet, Begüm, Hotels and Highways: The Construction of Modernization Theory in Cold War Turkey By Ghulyan, Husik
  31. Finance in Economic Growth: Eating the Family Cow By Peter Temin
  32. Participación de la fuerza de trabajo de mujeres en los sectores económicos de América Latina, durante el siglo XX By Silvana Maubrigades
  33. Environmental Hazards and Risk Management in the Financial Sector: A Systematic Literature Review By Miriam Breitenstein; Duc Khuong Nguyen; Thomas Walther
  34. Individuals tell a fascinating story: using unsupervised text mining methods to cluster policyholders based on their medical history By Romain Gauchon; Jean-Pascal Hermet
  35. The impact of health on GDP: A panel data investigation. By Aliona Neofytidou; Stilianos Fountas
  36. Market Power and Labor Share By Arthur Bauer; Jocelyn Boussard
  37. Lending a Hand: How Small Black Businesses Supported the Civil Rights Movement By Louis A. Ferleger; Matthew Lavallee
  38. The contribution of demography to Italy's economic growth: a two-hundred-year-long story By Federico Barbiellini Amidei; Matteo Gomellini; Paolo Piselli
  39. Violence and Children’s Education: Evidence from Administrative Data By Duque, Valentina
  40. The Causal Economic Effects of Olympic Games on Host Regions By Matthias Firgo
  41. Long-run historical and ecological determinants of economic development mediated by the cultural evolution of effective institutions By Flitton, Adam; Currie, Thomas E.
  42. The last Yugoslavs: ethnic diversity, national identity and civil war By Kukic, Leonard
  43. Aportes para el estudio de la transición fiscal en Ecuador en el siglo XX By Atenea Castillo; Reto Bertoni
  44. ROMANIA’S FOREIGN DEBT CRISIS IN THE 1980s, Determinants and consequences By Georgescu, George
  45. The Subversion of Shareholder Democracy and the Rise of Hedge-Fund Activism By Jang-Sup Shin

  1. By: CHIRAT, alexandre; , Le Chapelain Charlotte
    Abstract: Human capital theory has suffered much criticism. The filter theory of education (Arrow 1973), the theory of education as a “signal” (Spence 1973) and the theory of “screening” (Stiglitz 1975), for instance, have seriously challenged it from within mainstream economics, and heavy criticism has also come from other paradigms, with Bailly (2016) recently documenting the critique from the radical school. Within this set of ideas that flourished in the post-WWII period and challenged human capital theory, John Kenneth Galbraith’s analysis of the dynamics of the education process is often neglected. In his original institutionalist and firm-based approach to the evolution of education, Galbraith placed great emphasis on the issue of the requirements of the planning system when he tackled the issue of human capital investment. More surprisingly – since he is unanimously recognized as the “founding father” of the “human capital revolution” – Theodore Schultz himself developed a substantial critique of human capital theory that shares some ground with Galbraith’s. The aim of this contribution is to provide new insights into the history of post-WWII ideas in the field of economics of education by reviewing Schultz’s and Galbraith’s respective analyses of education and highlighting their proximities. Both authors raise doubts regarding the idea that the aggregation of individual choices must be regarded as the relevant generative mechanism of the dynamic of education and the basis of the allocation of education resources. Consequently, both question the equivocal concept of student sovereignty.
    Date: 2019–01–21
  2. By: Mark Glick (University of Utah)
    Abstract: This paper presents an historical analysis of the antitrust laws. Its central contention is that the history of antitrust can only be understood in light of U.S. economic history and the succession of dominant economic policy regimes that punctuated that history. The antitrust laws and a subset of other related policies have historically focused on the negative consequences resulting from the rise, expansion, and dominance of big business. Antitrust specifically uses competition as its tool to address these problems. The paper traces the evolution of the emergence, growth and expansion of big business over six economic eras: the Gilded Age, the Progressive Era, the New Deal, the post-World War II Era, the 1970s, and the era of neoliberalism. It considers three policy regimes: laissez-faire during the Gilded Age and the Progressive Era, the New Deal, policy regime from the Depression through the early 1970s, and the neoliberal policy regime that dominates today and includes the Chicago School of antitrust. The principal conclusion of the paper is that the activist antitrust policies associated with the New Deal that existed from the late 1930s to the 1960s resulted in far stronger economic performance than have the policies of the Chicago School that have dominated antitrust policy since the 1980s.
    Keywords: New Brandeis School, Antitrust economics, Antitrust law, Neoliberal Economic Theory, Chicago School Economics, History of Antitrust law
    Date: 2019–04
  3. By: Chivu, Luminita ("Costin C. Kirițescu" National Institute for Economic Research, Romanian Academy)
    Abstract: The configuration of industrial enterprises in Romania, in terms of numbers and structure, in relation to their characteristics, mirrors the Romanian economy and society at large, in their chronological development. Marked by the changes in the technological and economic paradigm, by the legal-institutional framework and changes in the ownership regime, by the commercial policy guidelines on the background of the dominant economic doctrine, but also by the characteristics of the communities in which they were operating, in turn the †architecture†of the industrial enterprises put a special footprint on the economic and social development. Our analyses are focusing on three major historical periods: a) the inter-war period, the arms industry, and the post-war reconstruction period of 1918-1947; b) the period of centralised economy (with nationalisation, collective farming, and planned economy as its corollary), 1948-1989; c) the period of transition to a market economy and the European Union integration, 1990-2017.
    Keywords: industrialization; industrial restructuring; privatization; deindustrialization
    JEL: D23 L11 L16 L22 L25 L52 N14
    Date: 2019–10
  4. By: Kaše, Vojtěch
    Abstract: Macro-historical data from several independent cultural environments reveal that the emergence of morally oriented religious systems, including representations of powerful and morally concerned deities, represents relatively recent development in human evolutionary history. The cultural evolutionary scholarship disagrees regarding what was the main factor responsible for the emergence and spread of these innovations over the past few millennia. Proponents of the Big Gods Hypothesis suggest that this development should be primarily associated with changes in social complexity, since representations of powerful and morally concerned deities represent a factor promoting cooperation among strangers in large-scale societies and thus a cultural selection advantage for groups adopting these innovations. Advocates of the Affluence Hypothesis suggest that the emergence and spread of morally oriented religious systems has to be primarily coupled with economic development, namely with an increase in affluence, which occurred during the so-called “Axial Age” period. According to this proposal, an increase in affluence enabled adoption of "slow" life-history strategies by certain proportion of the population, what led to emergence of new form of religion, emphasizing morality, long-terms goals and practices of self-control. This paper contributes to this debate by focusing on historical setting often referred to in both of these proposals: the ancient Mediterranean. Using quantitative text analysis methods in analyzing a corpus of ancient Greek texts from the period from 800 BC to 400 CE, this study offers a more nuanced view of the process under scrutiny than the one which has been proposed in previous ethnographic and comparative studies. Finding statistically significant differences in the context of usage of the Greek term theos (god) in the texts from the pre-axial and axial period, the obtained results can be more easily interpreted in terms of the Affluence Hypothesis than in terms of the competing account.
    Date: 2018–12–31
  5. By: Vucetic, Srdjan
    Abstract: The dominant discourse of British national identity in that year, which I label “Modern Britain”, acknowledged modernity’s material basis, the importance of wealth creation through technological innovation, industrial production and exports, the power of patriarchy, and the need for order, freedom, justice and fairness. Beyond this discourse, there was also a mass-based discourse—I label it “Socialism” to signal continuity with my topography of Britishness in 1950—that criticized Britain for its inherent elitism and excessive respect for inherited wealth. Part of Ted Hopf, Bentley Allan, and Srdjan Vucetic, Eds. Making Identity Count Project. Coding examples: m/2019/03/mic-uk-1960-coding.xlsx
    Date: 2019–05–15
  6. By: Cummins, Neil
    Abstract: Sharp declines in wealth-concentration occurred across Europe and the US during the 20th century. But this stylized fact is based on declared wealth. It is possible that today the richest are not less rich but rather that they are hiding much of their wealth. This paper proposes a method to measure this hidden wealth, in any form. In England, 1920-1992, elites are concealing 20-32% of their wealth. Among dynasties, hidden wealth, independent of declared wealth, predicts appearance in the Offshore Leaks Database of 2013-6, house values in 1999, and Oxbridge attendance, 1990-2016. Accounting for hidden wealth eliminates one-third of the observed decline of top 10% wealth-share over the past century.
    JEL: N00 N33 N34 D31 H26
    Date: 2019–10
  7. By: Nicolas End (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, International Monetary Fund (IMF)); Marina Marinkov (International Monetary Fund (IMF)); Fedor Miryugin (International Monetary Fund (IMF))
    Abstract: We construct a new, comprehensive instrument-level database of sovereign debt for 18 advanced and emerging countries during 1913–46, an eventful period characterized by notoriously high debt levels. This database is thus the first to provide public debt time series with such a high degree of comparability across countries and time. Documentation of qualitative instrument characteristics offers unique insights about the debt management policies that were implemented and the broader policies they helped finance. We document how interwar governments rolled over debts that were largely unsustainable and how the external public debt network contributed to the collapse of the international financial system in the early 1930s.
    Keywords: economic history,debt policy,public finance,macroeconomics
    Date: 2019–11–13
  8. By: Rita Martins de Sousa
    Abstract: This article analyses the transition from bimetallism to the gold standard in Portugal. The research has emphasised that the high percentage of gold coins in circulation and the network externalities were the main reasons for the de jure adoption of the gold standard in 1854. However, it has not provided a justification for either the appreciation of gold in the Portuguese market in 1847 which was contrary to the international trend or the reasons behind the decision to continue to circulate British gold sovereigns in 1851 when all other foreign coins were withdrawn. We argue that the political pressure applied by groups with ownership of British gold coins explains the transition from bimetallism to the gold standard.
    Keywords: PMonetary history, Gold standard, Portugal, nineteenth century JEL classification: N13; N20; E42
    Date: 2019
  9. By: de Carvalho, Andre Roncaglia
    Abstract: The paper analyzes the rise of the Latin American-based inertial inflation theory. Starting in the 1950s, various traditions in economics purported to explain the concept of “inflation inertia”. Contributions ranging from Celso Furtado and M.H. Simonsen to James Tobin anticipated key aspects of what later became the inertial inflation hypothesis, building it into either mathematical or conceptual frameworks compatible with the then contemporaneous macroeconomic theory. In doing so, they bridged the analytical gap with the North-American developments whilst maintaining the key features of the CEPAL approach, such as distributional conflicts and local institutional details. These contributions eventually influenced the second moment of the monetarist-structuralist controversy that unraveled in the 1980s. The paper also highlights how later works by structuralist economists gradually stripped the inertial inflation approach of its previous substance and form, thereby unearthing tensions among Latin-American structuralists that led to the eventual decline of this research program.
    Date: 2019–01–28
  10. By: Meisel-Roca, Adolfo; Ramírez-Giraldo, María Teresa; Santos-Cárdenas, Daniela
    Abstract: This paper explores the long run relationship between the physical stature of Colombians born during the twentieth century and several socio-economic development indicators using time series techniques. The econometric analysis is carried out considering three height measures: female’s height, male’s height, and the gender height dimorphism. The database comprises height information from the national identification cards for nearly 13 million persons born between 1910 and 1989: 6.283.452 men and 6.383.023 women. Results suggest the existence of a long-run relationship between all height measures and the economic variables included in the analysis. In general, the results indicate that improvements in the availability of better-quality food, and the reduction in food prices, measured by the degree of openness and by infrastructure developments, as well as improvements in the economic conditions lead to increases in average height. Regarding gender height inequality, the results show that height dimorphism in absolute terms decreased during the twentieth century. However, the downward trend observed until the end of 1950s reversed at the beginning of the 1960s, despite the advances in the living conditions of women during this period. This result suggests that earlier improvements in the economic conditions benefited women more than men, given the considerable gender gap in education, health, and income at the beginning of the twentieth century. On the contrary, GDP growth during the second half of the twentieth had higher returns for men relative to women.
    Keywords: Anthropometrics; Dimorphism; Income; Economic development; Cointegration
    JEL: I10 I15 N36 C22
    Date: 2019–11
  11. By: Greenwood, Jeremy (University of Pennsylvania); Guner, Nezih (CEMFI, Madrid); Kopecky, Karen A. (Federal Reserve Bank of Atlanta)
    Abstract: The 19th and 20th centuries saw a transformation in contraceptive technologies and their take up. This led to a sexual revolution, which witnessed a rise in premarital sex and out-of-wedlock births, and a decline in marriage. The impact of contraception on married and single life is analyzed here both theoretically and quantitatively. The analysis is conducted using a model where people search for partners. Upon finding one, they can choose between abstinence, marriage, and a premarital sexual relationship. The model is confronted with some stylized facts about premarital sex and marriage over the course of the 20th century. Some economic history is also presented.
    Keywords: age of marriage, contraceptive technology, history, never-married population, number of partners, out-of-wedlock births, premarital sex, singles
    JEL: J11 J12 N3 O3
    Date: 2019–11
  12. By: Catron, Peter
    Abstract: A long-standing debate is concerned over how long premigration socioeconomic differences persisted for immigrants and their descendants who entered at the turn-of-the-twentieth century. Some researchers argue that differences exist today, over 100 years after first arrival, while others argue that most differences disappeared after the third generation. However, none of this research has directly measured pre-migration socioeconomic status nor has it directly linked immigrants to their children. I create a new panel dataset that follows immigrants and their children from the sending country through settlement. Specifically, I link ship manifest records to census records to track how long premigration socioeconomic differences persist across generations. Passenger records provide a wealth of information of individuals including the occupation before arrival. I analyze how long premigration differences persist within and between groups. Whereas premigration socioeconomic status is associated with the first generation’s economic outcomes after settlement, many of these differences disappear by the second generation. These results suggest that background is not destiny for immigrant descendants. As scholars and politicians debate about whether countries should admit primarily high-skilled or low-skilled immigrants, the results from this article tell us whether such selection policies are necessary to ensure strong migrants’ performance in a period of open borders.
    Date: 2018–12–03
  13. By: Carlos Bastien; Ana Bela Nunes
    Abstract: Este paper traça uma perspetiva de longo prazo sobre questões de desenvolvimento articulando as teorias, doutrinas e políticas que prevaleceram em Portugal nos últimos dois séculos. Na primeira metade do século XIX a instabilidade política permanente agravada pela ocupação externa em alguns períodos conduziram à estagnação económica e as propostas políticas apresentadas por fisiocratas tardios e apoiantes do paradigma clássico mostraram-se inconsequentes. Contudo, neste período, não surgiram estratégias alternativas. Durante a segunda metade do século XIX, em rigor até à Primeira Guerra Mundial, um paradigma eclético dominou na teoria económica em Portugal. Se a influência dos economistas liberais franceses foi significativa, o seu impacto na política económica foi manifestamente fraco. De entre as abordagens minoritárias merece referência as que refletiram as ideias de List. A política liberal, apesar de ter conduzido a um período de relativa prosperidade, não promoveu um processo de industrialização e crescimento sustentado. No período entre as duas guerras mundiais, o corporativismo dominou quer em termos da teoria quer da política económica num padrão típico de capitalismo autárcico e intervencionista. O seu principal objetivo, mais do que promover o desenvolvimento económico, foi preservar os equilíbrios económicos e sociais existentes, através do controlo governamental da atividade económica. Neste período surgiu uma doutrina desenvolvimentista assente no lado da oferta, desenhada por engenheiros-economistas, mas sem qualquer teoria do desenvolvimento sólida a sustentá-la. O terceiro quartel do século XX foi o período mais bem sucedido de crescimento económico em Portugal e de receção da síntese neoclássica-keynesiana, nomeadamente dos modelos de crescimento keynesianos. Também um tipo peculiar de engenheirismo económico foi enquadramento teórico importante para as políticas de desenvolvimento. Contudo, no plano institucional o corporativismo continuou presente, nomeadamente ao perpetuar a ideia de que a regulação estatal era preferível aos mecanismos de mercado. A revolução de abril de 1974 abriu espaço a um breve período de socialismo. Contudo, a decisão de requerer a adesão às Comunidades Económica Europeias logo em 1977 e a necessidade de implementar políticas de ajustamento de curto prazo para fazer face a problemas graves de desequilíbrios externos, levaram ao desaparecimento da economia de desenvolvimento. Desde então a questão do desenvolvimento foi encarada no quadro do impacto positivo esperado da participação no processo de integração europeia, incluindo a adesão à Zona do Euro.
    Keywords: História do Pensamento Económico; Economia do desenvolvimento; Portugal JEL classification: B00; O11; O20
    Date: 2019
  14. By: Linsi, Lukas
    Abstract: In the 1950s-70s inward foreign direct investments (IFDI) were widely seen as a menace, threatening to undermine national economic development. Two decades later such concerns had virtually disappeared. Rather than as a problem, IFDI were now portrayed as a solution - even symbols of national economic success. To better understand the ideational dynamics underlying this remarkable transformation in perceptions of IFDI, this research traces the evolution of economic discourses in the United Kingdom over the post-war period. Deviating from conventional accounts in constructivist IPE, the investigation indicates that the rise of first-generation neoliberal discourses in the 1980s played only a secondary role in these processes. Instead, the discursive reshaping of IFDI was primarily driven by the rise of the narrative of national competitiveness in the early 1990s – a discourse inspired by managerial rather than neoclassical economic theory. Building a framework that prioritizes (multinational) firms over national economies, the rise of this second-generation neoliberal narrative played a critical role in promoting now taken-for-granted imaginaries of the global economy as an economic ”race” between nations-as-platforms-of-production. The findings highlight both the ideational underbelly of the rise of the competition state and how it re-shaped dominant social representations of IFDI.
    Date: 2019–07–10
  15. By: Igor B. Orlov (National Research University Higher School of Economics)
    Abstract: The 1980 Olympiad in Moscow (the first Olympiad in Eastern Europe and the socialist state) is viewed through the prism of the successes and failures of the cultural and sports diplomacy of the Soviet state. Olympics-80 as a kind of mega-project "developed socialism" promoted (albeit temporarily) not only to strengthening the position of the Soviet Union in the international arena (especially in the background of the Soviet invasion of Afghanistan), but also unity of Soviet citizens in the face of "Western threat". The situation was somewhat more complicated with attempts to use the Olympic project to strengthen the socialist camp. The source base of the research was the materials of the State archive of the Russian Federation, the Russian state archive of socio-political history and the Central archive of Moscow, as well as the published documents of the Russian state archive of modern history. It is shown that, despite the boycott of the Olympics, its consequences did not have a particularly strong impact on the development of sports ties and international tourism in the USSR. For example, in 1980, at the suggestion of the delegation of the USSR, the participants of the world conference on tourism, when adopting the Manila Declaration on world tourism, included in the Declaration all the initiatives of the Soviet delegation. And since 1982, the process of restoring international sports contacts began.
    Keywords: megaproject, soft power, cultural diplomacy, sports diplomacy, Olympics-80, international tourism
    JEL: Z
    Date: 2019
  16. By: Franco, Marco Paulo Vianna
    Abstract: A review of Nathaniel Wolloch's Nature in the History of Economic Thought: how natural resources became an economic concept
    Date: 2019–01–23
  17. By: Atkinson, A. B.; Jenkins, Stephen P.
    Abstract: This paper scrutinizes the conventional wisdom about trends in UK income inequality and also places contemporary inequality in a much longer historical perspective. We combine household survey and income tax data to provide better coverage of all income ranges from the bottom to the very top (and make our estimates available to other researchers). We make a case for studying distributions of income between tax units (i.e. not assuming the full income sharing that goes with the use of the household as the unit of analysis) for reasons of principle as well as data harmonization. We present evidence that income inequality in the UK is as least as high today as it was just before the start of World War 2.
    Keywords: inequality; tax unit; household; Gini coefficient; income tax data; household survey data; HBAI; SPI; ES/L009153/1
    JEL: C46 C81 D31
    Date: 2019–03–04
  18. By: Cherrier, Beatrice; Saïdi, Aurélien
    Abstract: This paper document the disciplinary exchanges between economists and engineers at Stanford throughout the 20th century. We also elucidate how this cross-fertlization was mediated by the institutional structure of the university. We outline the role of key scholars such as Kenneth Arrow and Robert Wilson, as well as engineers turned administrators like Frederick Terman. We show that engineers largely drew upon successive economic theories of decision and allocation with a view to improving practical industrial management decisions. Reciprocally, economists found in engineering the tools (from linear programming to optimal control theory) they needed to rethink production and growth theory, an epistemology of “application” that emphasized awareness to institutional details, trials and errors and experiments to improve the design of processes and machines, and all sorts of industrial settings to operationalize their theories of decision, strategic interaction and bargaining. By the 2000s, they had turned into economic engineers designing markets and other allocation mechanisms. These cross-disciplinary exchanges were mediated by Stanford’s own institutional culture, notably its use of joint appointments, the development of multidisciplinary “programs” for students, the ability to attract a variety of visitors every year, the entrepreneurial and contract-oriented vision of its administrators, and the close ties with the industrial milieu that came to be called the Silicon Valley.
    Date: 2019–04–19
  19. By: Fletcher, Jason
    Abstract: This paper uses data covering birth cohorts between 1900-1950 in the US to examine correlations in schooling between fathers and sons across time and place of birth. Using CPS data with special modules that capture parental education, findings suggest gradual increases in educational mobility across the first five decades of the 20th century. There is also geographic (regional) variation that is both large and persistent, with areas of the South showing educational transmission rates that are twice as high as areas in the Northeast.
    Date: 2019–07–26
  20. By: Andrews, David
    Abstract: review of Heinz Kurz's book 'Economic Thought: A Brief History'
    Date: 2019–01–25
  21. By: Anderson, D. Mark (Montana State University); Charles, Kerwin Kofi (Harris School, University of Chicago); Rees, Daniel I. (University of Colorado Denver); Wang, Tianyi (University of Pittsburgh)
    Abstract: According to Troesken (2004), efforts to purify municipal water supplies at the turn of the 20th century dramatically improved the relative health of blacks. There is, however, little empirical evidence to support the Troesken hypothesis. Using city-level data published by the U.S. Bureau of the Census for the period 1906-1938, we explore the relationship between water purification efforts and the black-white infant mortality gap. Our results suggest that, while water filtration was effective across the board, adding chlorine to the water supply reduced mortality only among black infants. Specifically, chlorination is associated with an 11 percent reduction in black infant mortality and a 13 percent reduction in the black-white infant mortality gap. We also find that chlorination led to a substantial reduction in the black-white diarrhea mortality gap among children under the age of 2, although this estimate is measured with less precision.
    Keywords: infant mortality, public health, black-white infant mortality gap
    JEL: I18 J11 J15 N3
    Date: 2019–11
  22. By: Christopher Ball (Quinnipiac University); Andreas Freytag (Friedrich-Schiller-University Jena, University of Stellenbosch, CESifo Research Network); Miriam Kautz (Friedrich-Schiller-University Jena)
    Abstract: The recent rise in populist governments has led to much work on the question "why now?". Our work takes the next logical step by asking "what next?". That is, given populists in power, what should we expect to be the economic consequences of populist regimes. To answer this, we characterize populist economic policies and argue that they generate an inverted J-curve effect, which we term a "walking stick" effect, in macro-level data, specifically GDP and inflation. To test this claim, we construct a unique data set on 13 Latin American countries from 1976 to 2012 and incorporate more modern and nuanced definitions of populism. Our contribution is both to test the walking stick claim and to present a novel dataset for studying the economic effects of populism. We find compelling evidence for our walking stick hypothesis in both GDP per capita and inflation, suggesting that the answer to "what next" is that we will see on average short-run booms followed by declines under populist regimes.
    Keywords: Populism, Latin America, Business Cycle, Political Economy
    JEL: E39 E60 H11 N16
    Date: 2019–11–22
  23. By: Nadia Garbellini (Universita di Bergamo)
    Abstract: Thomas Piketty`s (2014) Capital in the XXI Century aims to analyze distributions of income and wealth in a set of developed countries and their determinants, from the nineteenth century to the present. The objective is a bold one, made even more so by the fact that Piketty pursues it not only from a theoretical, but also, from an empirical point of view. The task is particularly impressive not only because of the enormous effort required in collecting and organizing data, but also because the work entails attaching a deterministic interpretation to facts and figures from radically different countries over a time span that covers almost two centuries, thereby forcing comparison between numbers coming from clearly incommensurable contexts. These difficulties are not lost to Piketty, who states that ``[w]ithout precisely defined sources, methods, and concepts, it is possible to see everything and its opposite.`` (Piketty, 2014, pp.2-3) This study argues that the empirical `methods and concepts` adopted by Piketty are not always consistent with those coming from his reference theoretical framework, nor from National Accounts (United Nations, 2009).
    Keywords: Capital, Capital output ratio, Income distribution, Inequality, Growth theory, National accounts.
    JEL: E01 E20 D30 D31 D33
    Date: 2018–01
  24. By: Ernest Aigner (Vienna University of Economics and Business); Matthias Aistleitner (Johannes Kepler University); Florentin Glotzl (Vienna University of Economics and Business); Jakob Kapeller (Johannes Kepler University)
    Abstract: Has the global financial crisis of 2007ff had a visible impact on the economics profession? To answer this question we employ a bibliometric approach and compare the content and orientation of economic literature before and after the crisis with reference to two different samples: A large-scale sample consisting of more than 440,000 articles published between 1956 and 2016 and a smaller sample of 400 top-cited papers before and after the crisis. Our results suggest that unlike the Great Depression of the 1930s the current financial crisis did not lead to any major theoretical or methodological changes in contemporary economics, although the topic of financial instability received increased attention after the crisis.
    Keywords: crisis, economics profession, economic journals, keyword analysis, paradigmatic development
    JEL: A14 B20 B26 G01 N00 N01
    Date: 2018–05
  25. By: Mazumder, Soumyajit
    Abstract: When do groups on the social periphery assimilate into the social core of a nation? Building on a diverse set of literatures, I argue that individual participation in military service creates a number of conditions that drive individuals to assimilate into a broader national culture. To test the theory, I focus on the case of World War I in the United States–a period that closely followed a massive wave of immigration into the United States. Using an instrumental variables strategy leveraging the exogenous timing of the war, I show that individuals of foreign, European nativity–especially, the Italians and Eastern Europeans–were more likely to assimilate into American society after serving in the U.S. military. The theory and results contribute to our understanding of the ways in which states make identity and the prospects for immigrant assimilation in an age without mass warfare.
    Date: 2019–05–06
  26. By: Kenichi Tomobe (Graduate School of Economics, Hitotsubashi University,); Takako Kimura (Graduate School of Economics, Osaka University); Keisuke Moriya (Graduate School of Economics, Hitotsubashi University,)
    Abstract: Our fact findings of the paper on height growth of primary students are as following;1: The average heightsof all grades of the Zakouji students borne at 1912 1914 and 1918 1920 clearly declined due to the @economic damage of lower local cocoon prices ;2: The Peak Height Velocity analysis shows the level of 1912 14 birth cohort declined from 5.64 to 4.72 comparing with the previous cohort, but at the next cohort the level soon returned to the almost same one; 3: Comparing height growth speed between eldest son s and other brothers, there was not clear difference of height growth speed between them. Rather in many cases the height growth speed of the eldest son looks lower than the average especially after nine years old after when children started to become prod uctive labor
    Keywords: height, anthropometric history , side production, sericulture, fish protein
    JEL: N35 N55 Q12 J1
    Date: 2019–11
  27. By: Karell, Daniel; Freedman, Michael Raphael
    Abstract: What rhetorics run throughout radical discourse, and why do some gain prominence over others? The scholarship on radicalism largely portrays radical discourse as opposition to powerful ideas and enemies, but radicals often evince great interest in personal and local concerns. To shed light on how radicals use and adopt rhetoric, we analyze an original corpus of more than 23,000 pages produced by Afghan radical groups between 1979 and 2001 using a novel computational abductive approach. We first identify how radicalism not only attacks dominant ideas, actors, and institutions using a rhetoric of subversion, but also how it can use a rhetoric of reversion to urge intimate transformations in morals and behavior. Next, we find evidence that radicals’ networks of support affect the rhetorical mixture they espouse, due to social ties drawing radicals into encounters with backers’ social domains. Our study advances a relational understanding of radical discourse, while also showing how a combination of computational and abductive methods can help theorize and analyze discourses of contention.
    Date: 2019–04–17
  28. By: Braun, Sebastian Till (University of Bayreuth); Dwenger, Nadja (DIW Berlin)
    Abstract: Following one of the largest displacements in human history, almost eight million forced migrants arrived in West Germany after WWII. We study empirically how the settlement location of migrants affected their economic, social and political integration in West Germany. We first document large differences in integration outcomes across West German counties. We then show that high inflows of migrants and a large agrarian base hampered integration. Religious differences between migrants and natives had no effect on economic integration. Yet, they decreased intermarriage rates and strengthened anti-migrant parties. Based on our estimates, we simulate the regional distribution of migrants that maximizes their labor force participation. Inner-German migration in the 1950s brought the actual distribution closer to its optimum.
    Keywords: forced migration, regional integration, post-war Germany
    JEL: N34 J15 J61
    Date: 2019–11
  29. By: Orgad, Shani
    Abstract: Over the last two decades, Television and New Media has provided a vital platform to explore the importance of media texts, technologies, institutions, practices and processes for normalizing inequality and injustice. One of the critical themes within this agenda, on which much of my own work has focused, concerns the role of narratives in sustaining relations of power and inequality. However, to date, media and communications studies mostly examine narratives either as stories that circulate in public discourse or as people’s personal narratives. In the context of deepening inequalities, the cementing of neoliberal rationality and the intensifying centrality of media and communication technologies in public and everyday life, connecting the two realms is a vital task. Drawing on C. Wright Mills’ The Sociological Imagination, I argue for and demonstrate the value of connecting what Mills famously called “the personal troubles of milieu” and “the public issues of social structure” in the study of current media and narrative. Analysis of how contemporary social and cultural narratives furnish and condition our most intimate personal troubles has a tragic aspect; that is, the realization that our lives are shaped by social forces not of our own making. Yet the intersection between media and cultural discourses and individuals’ sense-making of their experiences can open up possibilities for change and even resistance. Indeed, studying the relationship between social narratives and people’s personal narratives offers a way to link our understanding of social change to the critical media analysis which Television and New Media has been known for since the turn of the century.
    JEL: J1
    Date: 2019–09–25
  30. By: Ghulyan, Husik
    Abstract: Review of Adalet, Begüm, Hotels and Highways: The Construction of Modernization Theory in Cold War Turkey (Palo Alto, CA: Stanford University Press, 2018).
    Date: 2019–05–20
  31. By: Peter Temin (MIT Economics)
    Abstract: The American economy changed rapidly in the last half-century. The National Income and Product Accounts (NIPA) were designed before these changes started. They have stretched to accommodate new and growing service activities, but they are still organized for an industrial economy. It is hard to fit finance into the measurement of national product and of economic growth, and similar problems bedevil efforts to include other intangible investments as well. I describe how our current accounts deal with these problems, and I argue that existing NIPA data fail to describe the future path of growth in our new economy because they lack output data on financial, human and social capital investments. They fail to show that the United States is consuming its capital stock now and will suffer later, rather like killing the family cow to have a steak dinner.
    Keywords: NIPA, BEA, finance, economic growth, human capital, social capital
    JEL: B40 G19 N12
    Date: 2018–12
  32. By: Silvana Maubrigades (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: Este artículo analiza la evolución de la participación laboral de las mujeres en América Latina y su vínculo en relación a los procesos de desarrollo económico presentes en la región. Por un lado, se indaga la presencia de una curva en forma de “U” en el proceso de incorporación de mujeres al mercado de trabajo. Conjuntamente, se compararán las tendencias latinoamericanas con las observadas en países desarrollados y con una muestra de países de Asia, otra región en proceso de desarrollo, a los efectos de identificar la posible presencia de un patrón de incorporación de las mujeres al mercado laboral característico de América Latina. Por otro lado, al interior de América Latina, se presentan resultados comparados entre los diferentes grupos de países previamente identificados en la región y se analizan las tendencias desiguales en el proceso de incorporación de las mujeres a la fuerza de trabajo, en el contexto de los diferentes modelos de desarrollo a lo largo del siglo XX. Se trata de probar la existencia de una interacción entre el modelo económico vigente, en diferentes períodos de tiempo en la región, y las tasas de actividad de las mujeres.
    Keywords: mercado de trabajo, género, segregación laboral, América Latina.
    JEL: J16 J21 N36
    Date: 2018–12
  33. By: Miriam Breitenstein; Duc Khuong Nguyen; Thomas Walther
    Abstract: We conduct a systematic literature review on environmental and climate related risk management in the financial sector. The systematic literature review identified a total of 36 relevant articles. A formal coding leads to the aggregation and classification of papers to three main categories that consider the impact of environmental concerns on financial risk, the current state of environmental risk practices in the finance sector, and lastly measures to assess those risks within financial institutions. Our results put forward the risk reduction for financial institutions which highly commit with environmental responsibility and performance. More importantly, investors’ increase in awareness and willingness to assess climate-related financial risk would incentivize corporate managers to adopt more proactive environmental policies and practices. These findings also allow for intriguing discussions about several alleys for future research.
    Keywords: Environment, Climate, Risk Management, Banking, Financial Institutions
    Date: 2019–07
  34. By: Romain Gauchon (SAF - Laboratoire de Sciences Actuarielle et Financière - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon); Jean-Pascal Hermet (ADDACTIS France)
    Abstract: Background and objective: Classifying people according to their health profile is crucial in order to propose appropriate treatment. However, the medical diagnosis is sometimes not available. This is for example the case in health insurance, making the proposal of custom prevention plans difficult. When this is the case, an unsupervised clustering method is needed. This article aims to compare three different methods by adapting some text mining methods to the field of health insurance. Also, a new clustering stability measure is proposed in order to compare the stability of the tested processes. Methods : Nonnegative Matrix Factorization, the word2vec method, and marginalized Stacked Denoising Autoencoders are used and compared in order to create a high-quality input for a clustering method. A self-organizing map is then used to obtain the final clustering. A real health insurance database is used in order to test the methods. Results: the marginalized Stacked Denoising Autoencoder outperforms the other methods both in stability and result quality with our data. Conclusions: The use of text mining methods offers several possibilities to understand the context of any medical act. On a medical database, the process could reveal unexpected correlation between treatment, and thus, pathology. Moreover, this kind of method could exploit the refund dates contained in the data, but the tested method using temporality, word2vec, still needs to be improved since the results, even if satisfying, are not as better as the one offered by other methods.
    Keywords: unsupervised learning,clustering,health insurance,word embedding,Nonnegative Matrix Factorization,Self Organizing Map
    Date: 2019–11–08
  35. By: Aliona Neofytidou (Department of Economics, University of Macedonia); Stilianos Fountas (University of Macedonia)
    Abstract: Using a balanced panel of 19 industrial economies and a long time series ranging from 1950 to 2013, we investigate the short-run and long-run relationship between health, proxied by life expectancy, and income using panel cointegrating analysis and panel Granger causality. We find that total life expectancy, male life expectancy, and female life expectancy have all a positive and statistically significant short-run and the long-run effect on both total and per capita income. As a consequence, we conclude that health should be considered an important ingredient of the economic performance of an economy. We examine the robustness of our results using data from Scandinavian and non-Scandinavian countries.
    Keywords: consumption; financial wealth; housing wealth; wealth effects.
    JEL: I1 O4
    Date: 2019–11
  36. By: Arthur Bauer (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Jocelyn Boussard (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique, Directorate General for Economic and Financial Affairs (DG ECFIN) - European Commission)
    Abstract: This paper leverages a novel and comprehensive database on French firms from 1966 to 2016 to document important facts about secular trends in market power and labor shares, especially the role of market power in explaining variations of the aggregate labor share, as opposed to other technological factors. To do so, we follow the literature and rely on measures of industry concentration and firm level markups as proxies of market power. We find first that concentration has increased since the beginning of the 1980s in France, that the distribution of labor shares shifted upwards and that those two facts are correlated at the industry level. Second, aggregate markups increased slightly, but firm level markups decreased markedly. We find that the rise of concentration is correlated with a downward shift of the markup distribution, suggesting that the two measures might imperfectly capture different dimensions of market power. Third, larger firms have higher markups and lower labor shares. To sum up, larger firms with lower labor shares and higher markups gained market shares, even more so in industries where firm level labor shares increased and markups decreased most. From a macro point of view, the relative stability of the aggregate labor share in France can be decomposed into a small negative contribution of the aggregate markup, and a small positive contribution of aggregate technology, but from a micro point of view, reallocation contributed negatively, firm level markups contributed positively, and the contribution of technology was negligible.
    Date: 2019–11–07
  37. By: Louis A. Ferleger (Boston University); Matthew Lavallee (Boston University)
    Abstract: A large literature has detailed the seminal roles played in the Civil Rights Movement by activists, new political organizations, churches, and philanthropies. But black-owned businesses also provided a behind-the-scenes foundation for the movement’s success. Many black-owned businesses operated across the South because they provided goods and services to black customers who could not attain them from white businesses because of segregation. These small business owners very often played roles in civic matters that their counterparts in larger firms did not. Their civic participation and support contributed far more to the potential for political progress than scholars have recognized. Some accounts of the Montgomery Bus Boycott, for example, underestimate the significance of the role played by Montgomery`s community of black-owned businesses, from taxis to pharmacies. Examples from the Civil Rights Movement in Mississippi also illustrate the importance of local small businesses: black business owners were on the front lines, resisting strong pressures from the white community. This paper analyzes these episodes and places them in the context of black-owned businesses in the United States in the 1950s and 1960s, albeit descriptively given the unevenness and unavailability of standardized statistics. It also traces the debates over “Black Capitalism†and how the decline of segregation led to dramatic reorganizations of black businesses.
    Keywords: American Political Economy, Black Capitalism, Civil Rights Movement, Small Businesses, African American Businesses, Civic Participation, Martin Luther King, Jr., Andrew Brimmer
    JEL: A13 A14 B15 B52 D29 D72 G18 G21 J15 J48 L11 L21 N12 N82 N92 P48
    Date: 2017–12
  38. By: Federico Barbiellini Amidei (Bank of Italy); Matteo Gomellini (Bank of Italy); Paolo Piselli (Bank of Italy)
    Abstract: This paper examines the contribution of demography to economic growth in Italy by comparing the country’s past, present and future. We use an accounting framework to decompose GDP and per capita GDP growth, and we show how changes in the age structure of the population produced a positive demographic dividend in the past. By contrast, in the last twenty-five years and arguably in the future, demography has made and will continue to make a direct negative contribution to economic growth. Expected migration flows will noticeably limit the extent of this negative contribution, but they will not be able to reverse its sign. We analyze three possible developments, potentially driven by demography itself or fostered by policy actions –longer working lives, an increase in female labour market participation and higher education levels – which could counteract the pure negative accounting effects produced by the evolution of the age structure.
    Keywords: economic history, demography, demographic dividend, forecasts
    JEL: J11 N30
    Date: 2018–03
  39. By: Duque, Valentina
    Abstract: This paper exploits the sharp escalation of violence in Colombia in the 1980s associated with the emergence of drug cartels to provide novel evidence on the long-run effects of violence exposure throughout the life-course, on children’s educational attainment and academic achievement, using administrative data. I find that, a higher homicide rate in early-childhood is associated with a higher probability of school dropout and conditional on completing high school, lower scores on a national end-of-high school exam. Results are robust to several falsification tests, analyses of potential sources of selection bias, and to controlling for family fixed effects. I provide suggestive evidence that changes in fetal, child, and adolescent health outcomes are important potential mechanisms.
    Keywords: Education, Human capital formation, Early-life shocks, Violence, Parental investments
    Date: 2019–10
  40. By: Matthias Firgo
    Abstract: This paper studies the effects of hosting Olympic Games on the regional economy in the short and long run. For identification, runners-up in the Olympic bidding process are used to construct the counterfactual for Olympic host regions. In the short run, hosting Summer Olympics boosts regional GDP per capita by about 3 to 4 percentage points relative to the national level in the year of the event and the year before. There is also evidence for positive long-run effects but results on the latter are not statistically robust. In contrast, Winter Olympics do not have a positive impact on host regions. If anything, they lead to a temporal decline in regional GDP per capita in the years around the event.
    Keywords: Olympic Games, mega events, public infrastructure, regional development, causal effects, sports economics
    Date: 2019–11–23
  41. By: Flitton, Adam; Currie, Thomas E.
    Abstract: A huge number of hypotheses have been put forward to explain the substantial diversity in economic development. There is growing appreciation that cultural evolutionary processes may have played an important role in this emergence of this diversity. Historical factors such as the length of time societies have had experience with centralized political governance, or how long they have employed agricultural subsistence strategies have been presented as explanatory factors that have contributed to present-day economic performance. However, it is not clear whether duration of agriculture and ancestral statehood have exerted a direct effect on modern productivity, or whether they influence economies indirectly by shaping the evolution of norms or formal institutions. Here we use structural equation modelling and a global nation-level dataset to test between hypotheses involving a range of direct and indirect pathways. We show that the historical timing of agriculture predicts the timing of the emergence of statehood, which in turn affects economic development indirectly through its effect on institutions. Ecological factors appear to affect economic performance indirectly through their historical effects on the development of agriculture and by shaping patterns of European colonization. These results support the idea that cultural evolutionary processes have been important in creating effective institutions that enable large-scale cooperation and economic growth in present-day societies.
    Date: 2018–12–21
  42. By: Kukic, Leonard
    Abstract: Nation-building is often proposed as a device for integration and conflict reduction in ethnically divided societies. This paper analyses the role of interethnic contact in the process of nation formation within the unique historical setting of the multi-ethnic Yugoslavia. Using historical border changes as a proxy for exogenous population movements that influenced ethnic diversity, I find that interethnic contact stimulated the formation of the Yugoslav national identity. In addition, aligned with the notion that nation formation can reduce the incidence of ethnic conflict, I find that areas with more self-declared Yugoslavs experienced a lower intensity of conflict during the Bosnian War of 1992-1995.
    JEL: N40 Z13 O10
    Date: 2019–10
  43. By: Atenea Castillo (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República); Reto Bertoni (Programa de Historia Económica y Social, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: Fiscal policy reflects in good measure the institutional arrangements in effect in a particular historical context, given that it defines where resources are spent and how the state obtains them. Whether on purpose, or through omission, tax and spending structures lead to redistributive dynamics that modify the market allocation of resources. In particular, fiscal pressure and the types of fiscal instruments through which government revenues are obtained have an impact on the levels of inequality in a country. In this sense, it is important to identify these instruments and how they evolve over time in order to discuss long run fiscal transitions. This article presents new evidence for Ecuador. Long run, homogeneous time series are estimated in order to analyze changes in the levels and structure of government revenues of this country. The article concludes by attempting to identify fiscal transitions over the course of the 20th century.
    Keywords: Central Government, revenues, fiscal pressure, Ecuador, 20th century
    JEL: H21 H61 N46
    Date: 2019–10
  44. By: Georgescu, George ("Costin C. Kirițescu" National Institute for Economic Research, Romanian Academy)
    Abstract: Based on more recent research and evidence, including declassified information regarding the communist period in Romania, the study focuses on examining the 1980s foreign debt crisis context, its determinants and consequences, the impact of internal and external factors, intending to provide an image closer to reality of this dramatic episode. The global economy faced a severe economic and financial crisis at the beginning of the 1980s, when more than 30 developing countries entered default or restructuring on the sovereign debt. In the case of Romania, the impact of the foreign debt crisis triggered in 1981-1982 proved to be extremely hard, worsened by the overlap between the internal vulnerabilities accumulated in previous decades and the external shock coming from the major changes in the global economic, financial and geopolitical context at the end of 1979. The FED monetary policy at that time has led to the explosive rise in interest rates of the outstanding loans contracted from international commercial banks, to which Romania was highly indebted. The decision of simple-minded Ceausescu to liquidate the foreign debt and other serious errors concerning the crisis management had a destructive impact on the Romanian economy, which degenerated in a system crisis ended with its implosion in December 1989. Some consequences of the foreign debt crisis were felt also afterwards, slowing down significantly the pace of Romania’s transition to the market economy.
    Keywords: foreign debt crisis; oil crisis shocks; IMF; FED monetary policy; interest rates; sovereign debt restructuring; Romania
    JEL: B22 E44 E62 F34 H63 N44
    Date: 2018–10
  45. By: Jang-Sup Shin (National University of Singapore)
    Abstract: This paper explains how hedge-fund activists are exerting power over corporate resource allocation far in excess of the actual voting power of their shareholdings. The power of these `minority-shareholding corporate raiders` derives from misguided regulatory `reforms` carried out in the 1980s and 1990s in the name of `shareholder democracy`. Sanctioned and overseen by the Department of Labor (DOL) and the Securities and Exchange Commission (SEC), these reforms include the introduction of compulsory voting by institutional investors and proxy-voting rule changes that greatly facilitated hedge-fund activists` aggregation of the proxy votes of institutional investors. In addition, the introduction of the 1996 National Securities Markets Improvement Act (NSMIA) that allowed hedge funds to draw funds from institutional investors effectively with no limit also played an important role in the rise of hedge-fund activism. The paper concludes with policy proposals to rebalance value creation and value extraction by rebuilding the engagement and proxy voting system including (1) making it mandatory for shareholders to submit justifications in shareholder proposals on value creation or capital formation of corporations concerned; (2) removing voting as a fiduciary duty of institutional investors; (3) introducing differentiated voting rights that favor long-term shareholders; and (4) making it mandatory for both shareholders and management to reveal to the public what they discussed in engagement sessions.
    Keywords: Labor Shareholder democracy, Hedge-fund activism, Compulsory voting of institutional investors, Engagement and proxy rules, Proxy advisory firms, New Deal financial regulations, Sustainable value creation and value extraction.
    JEL: G18 G28 K22 L21 M10 N22
    Date: 2018–07

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.