nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2020‒09‒28
33 papers chosen by

  1. How the Disappearance of Unionized Jobs Obliterated an Emergent Black Middle Class By William Lazonick; Philip Moss; Joshua Weitz
  2. Never Together:Black and White People in the Postwar Economic Era By Peter Temin
  3. The Economic Impact of the Black Death By Remi Jedwab; Noel D. Johnson; Mark Koyama
  4. Patents in the Long Run: Theory, History and Statistics By Claude Diebolt; Karine Pellier
  5. Employment and Earnings of African Americans Fifty Years After: Progress? By Philip Moss; William Lazonick; Joshua Weitz
  6. The Long Shadow of Slavery: The Persistence of Slave Owners in Southern Law-Making By Bellani, Luna; Hager, Anselm; Maurer, Stephan
  7. Female entrepreneurship: business, marriage and motherhood in England and Wales, 1851–1911 By van Lieshout, Carry; Smith, Harry; Montebruno, Piero; Bennett, Robert
  8. J'Accuse! Antisemitism and Financial Markets in the Time of the Dreyfus Affair By Quoc-Anh Do; Roberto Galbiati; Benjamin Marx; Miguel Ortiz Serrano
  9. Epidemics, inequality and poverty in preindustrial and early industrial times By Guido Alfani
  10. Monetary Integration in West Africa: History, Theory, Policy By Youssef El Jai
  11. Biological Differences between Late 19th and Early 20th Century Urban and Rural Residence By Scott A. Carson
  12. Marketing evolution of performance enhancing drugs in professional cycling By J. J. Prinsloo; T. G. Pelser; P. S. Radikonyana
  13. Some thought on Shiller’s narrative economics By Ho, Tung Manh; Lab, SDAG
  14. The 1989 Influenza Pandemic and its Lessons for COVID-19 By Brian Beach; Karen Clay; Martin Saavedra
  15. The Influence of Early-life Economic Shocks on Long-term Outcomes: Evidence from the U.S. Great Depression By Duque, Valentina; Schmitz, Lauren L.
  16. The Financial Regulatory Cycle By Joao Rafael Cunha
  17. Leaning against the Wind and Crisis Risk By Moritz Schularick; Lucas ter Steege; Felix Ward
  18. Modern Money Theory, by defining money as state-issued debt instrument, failed to provide sufficient spending for securing full employment; but succeeded in blurring our understanding of money By Naba Kumar Adak
  19. Now Unions Increase Job Satisfaction and Well-being By David G. Blanchflower; Alex Bryson
  20. Revisiting the history of welfare economics By Roger E. Backhouse; Antoinette Baujard; Tamotsu Nishizawa
  21. Now Unions Increase Job Satisfaction and Well-being By David G. Blanchflower; Alex Bryson
  22. Openness to Trade and the Spread of Industrialization: Evidence from Canada during the First Era of Globalization By Taylor Jaworski; Ian Keay
  23. Education et finances publiques en Espagne de 1850 à 1965 By Claude Diebolt
  24. Payments Crises and Consequences By Qian Chen; Christoffer Koch; Gary Richardson; Padma Sharma
  25. The declining fortunes of (most) American workers By Laura A Harvey; James Rockey
  26. L'effet de la norme sur le sujet : la cruauté dans le rapport managérial au corps By Joan Le Goff
  27. Unemployment Fluctuations and Currency Returns in the United Kingdom: Evidence from Over One and a Half Century of Data By Deven Bathia; Riza Demirer; Rangan Gupta; Kevin Kotze
  28. The Fractured-Land Hypothesis By Jesús Fernández-Villaverde; Mark Koyama; Youhong Lin; Tuan-Hwee Sng
  29. The Quest for Economic Stability: A Study on Swedish Stabilization Policies 1873–2019 By Andersson, Fredrik N. G.
  30. Institutional Discrimination and Assimilation: Evidence from the Chinese Exclusion Act of 1882 By Chen, Shuo; Xie, Bin
  31. The Costs of Employment Segregation: Evidence from the Federal Government under Wilson By Abhay Aneja; Guo Xu
  32. Interbank Networks in the Shadows of the Federal Reserve Act By Haelim Anderson; Selman Erol; Guillermo Ordoñez
  33. Measuring Monetary Policy with Residual Sign Restrictions at Known Shock Dates By Harald Badinger; Stefan Schiman

  1. By: William Lazonick (Academic-Industry Research Network); Philip Moss (Academic-Industry Research Network); Joshua Weitz (Academic-Industry Research Network)
    Abstract: In this introduction to our project, `Fifty Years After: Black Employment in the United States Under the Equal Employment Opportunity Commission,' we outline the socioeconomic forces behind the promising rise and disastrous fall of an African American blue-collar middle class. During the 1960s and 1970s, blacks with no more than high-school educations gained significant access to well-paid unionized employment opportunities, epitomized by semi-skilled operative jobs in the automobile industry, to which they previously had limited access. Anti-discrimination laws under Title VII of the 1964 Civil Rights Act with oversight by the Equal Employment Opportunity Commission supported this upward mobility for blacks in the context of a growing demand for blue-collar labor. From the late 1970s, however, the impact of global competition and the offshoring of manufacturing combined with the financialization of the corporation to decimate these stable and well-paid blue-collar jobs. Under the seniority provisions of the now beleaguered industrial unions, blacks tended to be last hired and first fired. As U.S.-based blue-collar jobs were permanently lost, U.S. business corporations and government agencies failed to make sufficient investments in the education and skills of the U.S. labor force to usher in a new era of upward socioeconomic mobility. This organizational failure left blacks most vulnerable to downward mobility. Instead of retaining corporate profits and reinvesting in the productive capabilities of employees, major business corporations became increasingly focused on downsizing their labor forces and distributing profits to shareholders in the form of cash dividends and stock buybacks. Legitimizing massive distributions to shareholders was the flawed and pernicious ideology that a company should be run to “maximize shareholder value.†As the U.S. economy transitioned from the Old Economy business model, characterized by a career with one company, to the New Economy business model, characterized by interfirm labor mobility, advanced education and social networks became increasingly important for building careers in well-paid white-collar occupations. Along with non-white Hispanics, blacks found themselves at a distinct disadvantage relative to whites and Asians in accessing these New Economy middle-class employment opportunities. Eventually, the downward socioeconomic mobility experienced by blacks would also extend to devastating loss of well-paid and stable employment for whites who lacked the higher education now needed to enter the American middle class. By the twenty-first century, general downward mobility had become a defining characteristic of American society, irrespective of race, ethnicity, or gender. Since the 1980s, the enemy of equal employment opportunity through upward socioeconomic mobility has been the pervasive and entrenched corporate-governance ideology and practice of maximizing shareholder value (MSV). For most Americans, of whatever race, ethnicity, and gender, MSV is the not-so-invisible hand that has a chokehold on the emergence of the stable and well-paid employment opportunities that are essential for sustainable prosperity.
    Keywords: African American, employment relations, equal employment opportunity, unions, blue-collar, socioeconomic mobility, corporate governance, shareholder value, retain-and reinvest, downsize-and-distribute, discrimination, economic inequality
    JEL: D2 D3 G3 J0 L2 L6 N8 O3 P1
    Date: 2020–06–15
  2. By: Peter Temin (MIT)
    Abstract: This paper recounts American economic history for 60 years after World War II. The unusual part of this paper is that it focuses on not only the conventional tale, but also recounts what whites did to and for Blacks over this period. It starts from the unhappy experience of a Black American soldier, goes through the prosperity that followed the war and ends with the various changes that happened to the economy after 1970. The Civil Rights Movement is in the middle, and it gave rise to more Black education before racial segregation destroyed their gains. Some Blacks graduated from college and became a Black Elite. Obama’s election showed that the Black Elite could interact with relative equality with educated whites.
    Keywords: African Americans, Negroes, slavery, Jim Crow, Great Migration, World War II, Supreme Court.
    JEL: J15 N11 N12 K31
    Date: 2020–07–08
  3. By: Remi Jedwab (George Washington University); Noel D. Johnson (George Mason University); Mark Koyama (George Mason University)
    Abstract: *This paper is part of a Symposium organized by Dr. Remi Jedwab of the George Washington University that will appear in the Journal of Economic Literature.* The Black Death was the largest demographic shock in European history. We review the evidence for the origins, spread, and mortality of the disease. We document that it was a plausibly exogenous shock to the European economy and trace out its aggregate and local impacts in both the short-run and the long-run. The initial effect of the plague was highly disruptive. Wages and per capita income rose. But, in the long-run, this rise was only sustained in some parts of Europe. The other indirect long-run effects of the Black Death are associated with the growth of Europe relative to the rest of the world, especially Asia and the Middle East (the Great Divergence), a shift in the economic geography of Europe towards the Northwest (the Little Divergence), the demise of serfdom in Western Europe, a decline in the authority of religious institutions, and the emergence of stronger states. Finally, avenues for future research are laid out.
    Keywords: Pandemics; Black Death; Institutions; Cities; Urbanization; Malthusian Theory; Demography; Long-Run Growth;Middle Ages; Europe; Asia
    JEL: N00 N13 I15 I14 J11 O10 O43
    Date: 2020
  4. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karine Pellier
    Abstract: This paper examines the structural and spatial dynamics of patents in France, Germany, Japan, the United Kingdom and the United States. The time series are extracted from international, comparative and historical databases on the long-term evolution of patents in 40 countries from the 17th century to 1945 and in more than 150 countries from 1945 to present (Diebolt and Pellier 2010). We have found strong evidence of infrequent large shocks resulting essentially from the major economic and political events formed by the two World Wars in the 20th century. Our results question the autonomous process, i.e. the internal dynamic of the patent systems. Wars seem to drive innovation and, finally, the very process of economic growth. We further investigated the role of innovation in economic growth through a causality analysis between patents and GDP per capita. Our major findings support the assumption that the accumulation of innovations was a driving force only for France, the United Kingdom and the United States during the post-World War II period.
    Keywords: database,cliometrics,shock analysis,patents,causality,outliers,comparisons in time and space
    Date: 2020
  5. By: Philip Moss (Academic-Industry Research Network); William Lazonick (Academic-Industry Research Network); Joshua Weitz (Academic-Industry Research Network)
    Abstract: The Equal Employment Opportunity Commission (EEOC) was established in 1965 to implement Title VII of the Civil Rights Act of 1964, which made it illegal to discriminate against an individual in employment on the basis of race, color, religion, sex or national origin. Coming into the 1960s, the employment opportunity that privileged the white male was much more than a job. By the 1960s, growing numbers of white men had employment that gave them steadily rising real earnings, often with decades of tenure at one organization. The “career-with-one-company” (CWOC) that had become the employment norm by the beginning of the 1960s included health insurance and a defined-benefit pension, both funded by the employee’s business corporation or government agency. CWOC is what, in the decades immediately after World War II, turned much of white America into a growing and thriving middle class. This was a white middle class made up of, at the lower end, blue-collar workers with no more than a high-school education. Union representation in collective bargaining enforced the unions’ first-hired, last fired “seniority” principle while securing wage increases in step with productivity growth, with “cost-of-living allowances” that adjusted wages for inflation usually built into the contracts. Aided by government subsidies such as the federal GI Bill and tuition-free higher education at state “land grant” colleges, the male offspring of the white blue-collar worker had ample opportunity to transition to higher incomes, superior benefits, and even more employment security as a white-collar worker. In the 1950s, the white male who had recently ascended to the upper echelons of the middle class became known as “the organization man.” In the immediate aftermath of the 1964 Civil Rights Act, African Americans with no more than a high-school education gained access to CWOC employment at the blue-collar level. Owing to strong demand for production workers in the 1960s and 1970s and affirmative-action support under the EEOC, Blacks were making inroads into white-male privilege by gaining substantial access to well-paid and secure operative and craft occupations; big steps up from the common-laborer jobs into which they had previously been segregated. In the first Working Paper of this series , we outlined how the decline of unionized jobs from the beginning of the 1980s decimated an emergent African American blue-collar middle class. Over the decades it became clear, however, that, while African Americans were hit earlier and harder than whites, they were not the only ones to fall out of the middle class. Increasingly, white blue-collar workers with no more than a high-school education also lost their middle-class status as the ideology that companies should be run to “maximize shareholder value” put a permanent end to the CWOC norm. Over subsequent decades and up to the present, growing numbers of American workers with only a high-school education, regardless of race, have experienced stagnating incomes, downward socioeconomic mobility, and even, at certain times, declining life expectancy. In this, the second working paper of our Fifty Years After book manuscript, we provide a statistical overview of the changes in employment and earnings of Blacks since the mid-1960s. If Title VII of the Civil Rights Act of 1964, along with other anti-discrimination laws from that period, and the formation of the Equal Employment Opportunity Commission promised progress toward racial equality in employment and general well-being, the current situation shows a very troubling picture. Across all dimensions of economic well-being that are dependent on access to decent paying, secure jobs, Blacks fare worse than whites. We present the most recent available data on the occupations (for 2019) and the industries (for 2018) in which the different Black, white, Hispanic, and Asian members of the U.S. labor force are employed. Then, using the decennial censuses, we examine the distributions of Blacks across aggregate categories of occupations from 1960 to 2010 to see the changing pattern of jobs held by Blacks, in broad terms, from the time of the Civil Rights Act to the present. We then look at the differences in Black and white unemployment and wage rates, with and without accounting for differences in education. The racial gap in wages, after accounting for education level, has widened. Stable jobs that enable employees to share in productivity gains and hence increase their real earnings over time facilitate the accumulation of wealth. In its various forms, wealth influences the current and future well-being of families and their children by enabling investments in education and training, providing savings to offset unforeseen circumstances, and funding retirement. Although manifest progress has been made by a portion of better-educated Blacks, the overall picture for wealth accumulation by Blacks in comparison with whites is grim. A race-based wealth gap should be no surprise, as access of African Americans to stable, well-paid jobs has always been much less than for whites. Yet, the size of wealth disparities is extremely large and has worsened over the last fifty years. Currently the median family wealth for whites is ten times that of Blacks. We examine the wealth gap within separate categories, including housing equity, housing stability measured by delinquency on mortgages and foreclosure, retirement savings and liquid savings, corporate shareholding, and student-loan debt. We also look at health insurance coverage because it functions, in part, like savings that can be called upon to deal with unanticipated events. And lack of health insurance can wipe out one’s accumulated wealth should one require hospitalization and/or expensive drugs. In every one of these components of wealth, Blacks trail whites by large and increasing amounts. Each of these indicators reflects the persistent and even growing Black-white disparities in earnings, employment security, and career patterns over time. Which leaves us with the question that the “Fifty Years After” project seeks to answer: What happened to equal employment opportunity? For a quest for economic equality to become a reality, the pay and stability of employment for Blacks must be improved far more than for whites. But in view of the downward mobility of white workers, even a substantial closing of the Black-white income gap will not solve the problems of poverty and injustice in the United States. Contrary to the situation in the 1960s, in the presence of the impoverished and vulnerable American working class of the 2020s, “equal employment opportunity” will not yield the upward socioeconomic mobility for Blacks that was possible in the 1960s and 1970s. The Covid-19 crisis is having an especially devastating impact on people of color, but workers of every race and ethnicity are feeling immense pain. Even when the public-health crisis has abated, the gargantuan political task for the years and decades ahead will be the restoration of employment opportunity that will enable all Americans to live healthy, secure, and happy lives.
    Keywords: African American, occupations, industries, education, employment opportunity, employment relations, income distribution, wealth accumulation, stock buybacks
    JEL: D2 D3 G3 J0 L2 L6 N8 O3 P1
    Date: 2020–07–13
  6. By: Bellani, Luna (University of Konstanz); Hager, Anselm (University of Konstanz); Maurer, Stephan (University of Konstanz)
    Abstract: This paper documents the persistence of the Southern slave owning elite in political power after the end of the American Civil War. We draw on a database of Texan state legislators between 1860 and 1900 and link them to their or their ancestors' slaveholdings in 1860. We then show that former slave owners made up more than half of nearly each legislature's members until the late 1890s. Legislators with slave owning backgrounds differ systematically from those without, being more likely to represent the Democratic party and more likely to work in an agricultural occupation. Regional characteristics matter for this persistence, as counties with higher soil suitability for growing cotton on average elect more former slave owners.
    Keywords: wealth inequality, elites and development, US South, intergenerational persistence, slavery
    JEL: D72 J62 N31 H4
    Date: 2020–08
  7. By: van Lieshout, Carry; Smith, Harry; Montebruno, Piero; Bennett, Robert
    Abstract: This article offers a new perspective on what it meant to be a business proprietor in Victorian Britain. Based on individual census records, it provides an overview of the full population of female business proprietors in England and Wales between 1851 and 1911. These census data show that around 30% of the total business population was female, a considerably higher estimate than the current literature suggests. Female entrepreneurship was not a uniform experience. Certain demographics clustered in specific trades and within those sectors employers and own-account proprietors had strikingly different age, marital status and household profiles. A woman’s life cycle event such as marriage, motherhood and widowhood played an important role in her decision whether to work, the work available to her and the entrepreneurial choices she could make. While marriage and motherhood removed women from the labour force, they had less of an effect on their levels of entrepreneurship. Women who had young children were more entrepreneurial than those who had none, and entrepreneurship rates rose with the arrival of one child and continued to rise the more children were added to the family.
    Keywords: Entrepreneurship; women; gender; Victorian Britain; nineteenth century; life cycle; motherhood
    JEL: B54 D1 D91 L26 M13 N83
    Date: 2019–04–09
  8. By: Quoc-Anh Do (Département d'économie); Roberto Galbiati (Département d'économie); Benjamin Marx (Département d'économie); Miguel Ortiz Serrano (Universidad Carlos III de Madrid (UCM))
    Abstract: This paper studies discrimination in financial markets in the context of the “Dreyfus Affair” in 19th century France. The Affair originated from the wrongful conviction of a Jewish officer, Alfred Dreyfus, and revealed the depth of antisemitism in French society. We show that firms with Jewish board members experienced abnormal stock returns after several salient events of the Affair. However, in the long run, these firms experienced higher returns during the media campaign sparked by J’Accuse...!, a famous editorial that paved the way for Dreyfus’ rehabilitation. Our preferred interpretation is that media coverage of the Affair changed beliefs among antisemitic investors, allowing those who bet on Jewish-connected firms to capture excess returns through arbitrage. Our findings provide novel evidence on the existence of rents from discrimination and the economic impacts of antisemitism.
    Keywords: Antisemitism; Financial Markets; Discrimination
    JEL: J15 J71 N23 G14
    Date: 2020–08
  9. By: Guido Alfani (Bocconi University, Dondena Centre, IGIER, and Stone Center for Research on Socio-Economic Inequaltiy)
    Abstract: *This paper is part of a Symposium organized by Dr. Remi Jedwab of the George Washington University that will appear in the Journal of Economic Literature.* Recent research has explored the distributive consequences of major historical epidemics, and the current crisis triggered by Covid-19 prompts us to look at the past for insights about how pandemics can affect inequalities in income, wealth, and health. The fourteenth-century Black Death, which is usually believed to have led to a significant reduction in economic inequality, has attracted the greatest attention. However, the picture becomes much more complex if other epidemics are considered. This article covers the worst epidemics of preindustrial times, from Justinian’s Plague of 540-41 to the last great European plagues of the seventeenth century, as well as the cholera waves of the nineteenth. It shows how the distributive outcomes of lethal epidemics do not only depend upon mortality rates, but are mediated by a range of factors, chief among them the institutional framework in place at the onset of each crisis. It then explores how past epidemics affected poverty, arguing that highly lethal epidemics could reduce its prevalence through two deeply different mechanisms: redistribution towards the poor, or extermination of the poor. It concludes by recalling the historical connection between the progressive weakening and spacing in time of lethal epidemics and improvements in life expectancy, and by discussing how epidemics affected inequality in health and living standards.
    Keywords: epidemics, inequality, poverty
    JEL: D31 D63 I14 I30 J11 N30 N33
    Date: 2020
  10. By: Youssef El Jai
    Abstract: Prior to the colonial era, money issuance in West Africa depended on slave trade. With the advent of the colonial rule, silver coins were imported then progressively imposed as a tool of coercion. The post-colonial trajectory was different for former British and French colonies. While the former regained their monetary sovereignty, the latter continued under a monetary union under the auspices of France. The proposal of the Eco as a single currency for ECOWAS is therefore a whole new step for some countries and a simple exercise of adaptation for others. Hence, a bold policy agenda is needed if the currency union is to be a success.
    Date: 2020–06
  11. By: Scott A. Carson
    Abstract: Communities urbanize when the net benefits to urbanization exceed rural areas. Body mass, height, and weight are biological welfare measures that reflect the net difference between calories consumed and calories required for work and to withstand the physical environment. Across the United States, 19th century urban heights and weights were lower than their rural counterparts, while urban BMIs were higher. However, as the ratio of weight to height, higher urban BMIs reflect shorter urban statures, indicating there was a willingness-to-accept poorer cumulative urban health and net nutrition in exchange for urban economic opportunity. Over the late 19th and early 20th centuries, urban and rural BMIs, height, and weight were constant, and rural farmers had greater BMIs, taller statures, and heavier weights than urban farmers and workers in other occupations.
    Keywords: urbanization, stature variation, cumulative net nutrition, nativity, race
    JEL: C10 C40 D10 I10 N30
    Date: 2020
  12. By: J. J. Prinsloo (NWU Business School, North-West University); T. G. Pelser (University KwaZulu-Natal); P. S. Radikonyana (Municipal Demarcation Board, Pretoria)
    Abstract: The use of performance enhancing drugs (PED?s) is prevalent amongst professional cyclists. Over the past 100 years, the use there-off went through different evolutionary periods. The products (PED?s) evolved since the 1900?s. During the early 1900?s products like tobacco and alcohol were used. Fifty years later, after WWII, amphetamines (developed during the WWII period) was the product of choice. Since the late 1980?s another product evolution took place. Erythropoietin (EPO) a product designed for cancer patients started surfacing amongst cyclists. Ironically this product have one primary negative side effect ? sudden death. However, this did not curtail or stop the use. Positive effects were and are massive in terms of athlete performance. This paper look at the historical time line of the use of PED?s. The use there-off as well as the various effects it had and have on cyclists. Marketing (push strategy) did and do not drive this phenomena. Based on its ?submerged or underground? nature of products and its use, a ?pull strategy? seem to be the chosen marketing channel application. Intermediaries does not fir the accepted marketing profile. Rather medical qualified individuals seem to become links in these distribution channels. A qualitative literature empirical approach was used. Literature was scrutinised based on a convenient and purposive nature. Because of the sensitive and ethical nature of this paper, a pure qualitative interview approach was disregarded. The aim of this paper was to structure the historical time line as well as the evolution of these products.The findings, although sensitive, is two-fold in nature. These recommended suggestions are highly speculative and should be treated as alternative suggestions to the current situation.
    Keywords: Performance enhancing drugs (PED?s); Tour de France (TdF); Submerged markets; Marketing channel; ?Word of Mouth? communication
    JEL: M00
  13. By: Ho, Tung Manh; Lab, SDAG
    Abstract: The Nobel Prize-winning economist Robert Shiller published an article in the American Economic Review in 20171 and a book in 20192 , both carrying the term “narrative economics.”
    Date: 2020–09–03
  14. By: Brian Beach (Vanderbilt University and NBER); Karen Clay (Carnegie Mellon University and NBER); Martin Saavedra (Oberlin College)
    Abstract: *This paper is part of a Symposium organized by Dr. Remi Jedwab of the George Washington University that will appear in the Journal of Economic Literature.* This article reviews the global health and economic consequences of the 1918 in uenza pandemic, with a particular focus on topics that have seen a renewed interest because of COVID-19. We begin by providing an overview of key contextual and epidemiological details as well as the data that are available to researchers. We then examine the effects on mortality, fertility, and the economy in the short and medium run. The role of nonpharmaceutical interventions in shaping those outcomes is discussed throughout. We then examine longer-lasting health consequences and their impact on human capital accumulation and socioeconomic status. Throughout the paper we highlight important areas for future work.
    Keywords: Pandemics; 1918 Influenza; COVID-19; epidemics;
    JEL: I10 N0 J10 J24
    Date: 2020
  15. By: Duque, Valentina; Schmitz, Lauren L.
    Abstract: We show that health and productivity around retirement age, and earnings over the life cycle, vary with exposure to economic conditions in early life. Using state-year-level variation from the most severe and prolonged economic downturn in American history—the Great Depression—combined with restricted micro-data from the Health and Retirement Study, we find that changes in macroeconomic indicators before age 6 are associated with changes in economic well-being, earnings, metabolic syndrome, and physical limitations decades later. We also document large declines in long-term mortality. Results are not driven by endogenous fertility responses throughout the 1930s. Our results help inform the design of retirement and healthcare systems and the long-term costs of business cycles.
    Keywords: Human Capital; Poverty; Unemployment; Aging
    Date: 2020–09
  16. By: Joao Rafael Cunha (University of St Andrews)
    Abstract: This paper presents the idea of the financial regulatory cycle in the United States. I show that there have been three long cycles of financial regulation since the independence of the country in 1776. Moreover, there are also smaller cycles within these long regulatory cycles. Contingent capital may be a way to curb the impact of the regulatory cycle.
    Keywords: Financial Regulation; United States Banks; Law and Economics; Financial History
    JEL: G21 G28 K2 N22 N42
    Date: 2020–09–07
  17. By: Moritz Schularick; Lucas ter Steege; Felix Ward
    Abstract: Can central banks defuse rising stability risks in financial booms by leaning against the wind with higher interest rates? This paper studies the state-dependent effects of monetary policy on financial stability. Based on the near-universe of advanced economy financial cycles since the 19th century, we show that discretionary leaning against the wind policies during credit and asset price booms are more likely to trigger crises than prevent them.
    Keywords: financial crises, instrumental variable, open economy trilemma, local projections
    JEL: E44 E50 G01 G15 N10
    Date: 2020
  18. By: Naba Kumar Adak (Sabang Sajanikanta Mahavidyalaya, West Bengal)
    Abstract: The purpose of this paper is to explain MMT?s misconception and misrepresentation relating to money?s origin, character and function, and monetary & fiscal policies. The MMT is a conglomeration of different contradictory and already discarded theories put forward by earlier economists like Credit Theory of A. Mitchell Innes, State Theory or Chartalist Theory of money of Georg Friedrich Knapp, combination of Credit Theory and State Theory of money by Geoffrey Ingham (in his article ?Money is a Social Relation?), Functional Finance theory of Abba Lerner, Money theory of Keynes, Sectoral Balance Approach of Wynne Godley and so on. The MMT developed another unique theory called Consolidation between the Government and the Central Bank. Though MMT claims that it provides an alternative definition of money, yet, in reality, it does not want to explore what money is and how money had been evolved as a medium of exchange. The MMT argues that in the modern capitalist system, money is nothing but a numeraire or an account of credit (debt) and has no intrinsic value of its own and that money is neither pegged to any commodity nor a medium of exchange. The MMT, then, begins to impose this theory (money is a state-issued debt instrument) on the history of evolution of money. Therefore, their explanation does not reflect how money really evolved or what money really is.Other purpose of this paper is to explain that these concepts and theories of MMT are hypothetical and have no connection with how present economy is functioning. If the suggestion, of MMT for increasing budget-deficit without provisioning how the debt (for financing the deficit) will be redeemed, is followed blindly then the economy as a whole will be led to a catastrophe and collapse. This conceptual/ theoretical paper concludes that the MMT became a hotchpotch combination of impractical fanciful and arbitrarily concocted theories. Therefore, the MMT became the most un-intelligible theory. It is not at all functional. So, this exercise (criticism of MMT) is necessary in order to eliminate the negative impacts of the MMT on the theories and practices of economics at large.Another purpose of this paper is to show that the primary cause of most of the economic anomalies is money?s entrance into the economy from its issuer the central bank as debt. This paper suggests that economists should formulate such a theory that will free money from its debt nature. This paper concludes that the very nature of money?s origin as debt (from the central bank to the economy) is a systemic defect and this defect is primarily responsible for continuous economic downturn and frequent recession. However, the MMT does not try to find how this debt-nature of money can be eliminated. On the contrary, the MMT gives emphasis that money (even commodity money) should be recognized as nothing but a debt-instrument.Therefore, this paper implores that some theory should be constructed so that money can originate as ?debt-free?. If money originates free of debt only then sustainable economic growth can be secured.
    Keywords: Functional finance, hierarchy of money, Modern Money Theory, credit theory of money, state theory of money, printing money, theory of consolidation between the government and the central bank, full employment, High Powered Money, barter through caste system, sectoral balance approach
    JEL: B59 E52 E62
  19. By: David G. Blanchflower (University of Stirling, GLO, Bloomberg and NBER); Alex Bryson (University College London, NIESR and IZA)
    Abstract: Using data from the United States and Europe on nearly two million respondents we show the partial correlation between union membership and employee job satisfaction is positive and statistically significant. This runs counter to findings in the seminal work of Freeman (1978) and Borjas (1979) in the 1970s and most empirical studies since. With data for the United States we show the association between union membership and job satisfaction switched from negative to positive in the 2000s. Cohorts with positive union effects over time come to dominate those with negative effects. The negative association between membership and job satisfaction is apparent in cohorts born in the 1940s and 1950s but turns positive for those born between the 1960s and 1990s. Analyses for Europe since the 2000s confirm the positive association between union membership and worker wellbeing is apparent elsewhere. We also find evidence in the United Kingdom from panel estimation of a positive relation between union membership and job satisfaction. We find positive union associations with other aspects of worker wellbeing including life satisfaction and happiness, several macro variables and various measures of trust. Union members are also less likely to be stressed, worried, depressed, sad or lonely. The findings have important implications for our understanding of trade unionism.
    Keywords: : union membership; job satisfaction; worker wellbeing; trust; age; cohort effects; union density
    JEL: J28 J50 J51
    Date: 2020–08–01
  20. By: Roger E. Backhouse (University of Birmingham and Erasmus University Rotterdam); Antoinette Baujard (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France); Tamotsu Nishizawa (Teikyo University, Faculty of Economics, Tokyo)
    Abstract: Our forthcoming book, Welfare Theory, Public Action and Ethical Values challenges the belief that, until modern welfare economics introduced issues such as justice, freedom and equality, economists adopted what Amartya Sen called “welfarism.” This is the belief that the welfare of society depends solely on the ordinal utilities of the individuals making up the society. Containing chapters on some of the leading twentieth-century economists, including Walras, Marshall, Pigou, Pareto, Samuelson, Musgrave, Hicks, Arrow, Coase and Sen, as well as lesser-known figures, including Ruskin, Hobson and contributors to the literature on capabilities, the book argues that, whatever their theoretical commitments, when economists have considered practical problems they have adopted a wider range of ethical values, attaching weight to equality, justice and freedom. Part 1 explains the concepts of welfarism and non-welfarism and explores ways in which economists have departed from welfarism when tackling practical problems and public policy. Part 2 explores the reasons for this. When moving away from abstract theories to consider practical problems it is often hard not to take an ethical position and economists have often been willing to do so. We conclude that economics needs to recognise this and to become more of a moral science.
    Keywords: Welfarism, non-welfarism, welfare, public policy, ethics, economics, individualism
    JEL: B21 B31 B41 D63 I31
    Date: 2020
  21. By: David G. Blanchflower; Alex Bryson
    Abstract: Using data from the United States and Europe on nearly two million respondents we show the partial correlation between union membership and employee job satisfaction is positive and statistically significant. This runs counter to findings in the seminal work of Freeman (1978) and Borjas (1979) in the 1970s and most empirical studies since. With data for the United States we show the association between union membership and job satisfaction switched from negative to positive in the 2000s. Cohorts with positive union effects over time come to dominate those with negative effects. The negative association between membership and job satisfaction is apparent in cohorts born in the 1940s and 1950s but turns positive for those born between the 1960s and 1990s. Analyses for Europe since the 2000s confirm the positive association between union membership and worker wellbeing is apparent elsewhere. We also find evidence in the United Kingdom from panel estimation of a positive relation between union membership and job satisfaction. We find positive union associations with other aspects of worker wellbeing including life satisfaction and happiness, several macro variables and various measures of trust. Union members are also less likely to be stressed, worried, depressed, sad or lonely. The findings have important implications for our understanding of trade unionism.
    JEL: J28 J50 J51
    Date: 2020–08
  22. By: Taylor Jaworski; Ian Keay
    Abstract: We use new data on manufacturing in Canada to quantify the impact of globalization on the growth and composition of industrialization in the second half of the nineteenth century. We find that industries and regions more exposed to international trade experienced faster growth. Consistent with the literature on economic development in Canada, we find that scale economies, government policy decisions, and domestic market expansion also played an important role in manufacturing growth. However, after controlling for these factors, we find that greater exposure to globalization shaped the pattern of regional industrialization in a way not appreciated in Canadian historiography.
    JEL: F63 N11 N71 O14
    Date: 2020–08
  23. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Keywords: Cliométrie,Education,Espagne,Finances publiques,Histoire économique
    Date: 2020
  24. By: Qian Chen; Christoffer Koch; Gary Richardson; Padma Sharma
    Abstract: Banking-system shutdowns during contractions scar economies. Four times in the last forty years, governors suspended payments from state-insured depository institutions. Suspensions of payments in Nebraska (1983), Ohio (1985), and Maryland (1985), which were short and occurred during expansions, had little measurable impact on macroeconomic aggregates. Rhode Island’s payments crisis (1991), which was prolonged and occurred during a recession, lengthened and deepened the downturn. Unemployment increased. Output declined, possibly permanently relative to what might have been. We document these effects using a novel Bayesian method for synthetic control that characterizes the principal types of uncertainty in this form of analysis. Our findings suggest policies that ensure banks continue to process payments during contractions – including the bailouts of financial institutions in 2008 and the unprecedented support of the financial system during the COVID crisis – have substantial value.
    Keywords: Payments crisis; Money and banking; Depository institutions; Bank suspension; Synthetic control; Bayesian inference
    JEL: E51 E52 E58 G18 G21
    Date: 2020–08–18
  25. By: Laura A Harvey (University of East Anglia); James Rockey (University of Leicester)
    Abstract: While real US GDP per capita has increased around 80% since 1980, median incomes have remained roughly constant. However, as this paper documents, this stagnation masks an important decline. Male median real incomes have been lower than that of their forebears, at every age, for the last 30 years. We show that this is true across the life cycle and across the wage distribution. Moreover, younger generations have also had to wait longer to reach peak earnings. Further analysis shows that this decline is particularly concentrated on high school graduates. The same pattern is found for female high school graduates yet, African American and Hispanic American women are an important exception. Variance decompositions suggest that these intergenerational differences are quantitatively important. While reductions in hours worked cannot explain the decline, substantial decreases in the labour share are consistent with decreasing incomes in the face of productivity growth. Calculations suggest that hedonic improvements in the quality of goods and services would have to have been equivalent to 30% of younger cohorts’ lifetime consumption for their consumption levels to match those of their predecessors
    Keywords: Wages, Intergenerational Differences, Labour Share, Stagnation, Jobs
    JEL: E24 J24 J31 D33 D31
    Date: 2020–08–10
  26. By: Joan Le Goff (IRG - Institut de Recherche en Gestion - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UNIV GUSTAVE EIFFEL - Université Gustave Eiffel)
    Abstract: Le management mondialisé contemporain porte une attention contradictoire au corps humain. D'un côté, les corps sont idéalisés, notamment dans leurs dimensions esthétiques et mécaniques ; de l'autre, ils sont maltraités à tous les niveaux des chaînes hiérarchiques des organisations, et au-delà de celles-ci. Se souvenir, avec Giorgio Agamben et Pierre Legendre, que le principe gestionnaire s'inscrit dans une théologie institutionnalisée permet de saisir ce paradoxe apparent. Mais, plus encore, comprendre avec Michel Foucault que le management moderne va s'adosser à la révolution du regard portée par la naissance de la clinique éclaire les ressorts de la domestication des corps : depuis le XIXe siècle, le rapport managérial au corps repose tout entier sur le concept de cruauté – en tant que mise en scène du regard sur le corps souffrant –, levier du gouvernement des comportements individuels dans une logique d'efficacité.
    Keywords: Normalisation,Management,Foucault,Entreprise,Cruauté,Corps,Norme,Organisations,Recherche critique en management,Histoire de la pensée managériale
    Date: 2020–10
  27. By: Deven Bathia (Queen Mary University of London, School of Business and Management, Mile End Road, London, E1 4NS, United Kingdom); Riza Demirer (Department of Economics & Finance, Southern Illinois University Edwardsville, Edwardsville, IL 62026-1102, USA); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Kevin Kotze (School of Economics, Faculty of Commerce, University of Cape Town, Private Bag, Rondebosch 7701, South Africa)
    Abstract: This paper provides a long-term perspective to the causal linkages between currency dynamics and macroeconomic conditions by utilising a long span data set for the United Kingdom that extends back to 1856 and a time-varying causality testing methodology that accounts for the nonlinearity and structural breaks. Using unemployment fluctuations as a proxy for macroeconomic conditions and wavelet decompositions to obtain the fundamental factor that drives excess returns for the British pound, time varying causality tests based on alternative model specifications yield significant evidence of causal linkages and information spillovers across the labour and currency markets over the majority of the sample. Causal effects seem to strengthen during the Great Depression and later following the collapse of the Bretton Woods system, highlighting the role of economic crises in the predictive linkages between the two markets. While the predictive role of currency market dynamics over unemployment fluctuations reflects the effect of exchange rate volatility on corporate investment decisions, which in turn, drives subsequent labour market dynamics (e.g. Belke & Gros (2001); Belke & Kaas (2004); Feldman (2011); among others), we argue that causality in the direction of exchange rates from unemployment possibly reflects the signals regarding monetary policy actions, which in turn, spills over to financial markets. Overall, the findings indicate significant information spillovers across the labour and currency markets in both directions with significant policy making implications.
    Keywords: Time-varying Granger Causality, GARCH, DCC-MGARCH, Unemployment, Exchange rates
    JEL: C10
    Date: 2020–09
  28. By: Jesús Fernández-Villaverde; Mark Koyama; Youhong Lin; Tuan-Hwee Sng
    Abstract: Patterns of political unification and fragmentation have crucial implications for comparative economic development. Diamond (1997) famously argued that “fractured land” was responsible for China's tendency toward political unification and Europe's protracted political fragmentation. We build a dynamic model with granular geographical information in terms of topographical features and the location of productive agricultural land to quantitatively gauge the effects of “fractured land” on state formation in Eurasia. We find that either topography or productive land alone is sufficient to account for China's recurring political unification and Europe's persistent political fragmentation. The existence of a core region of high land productivity in Northern China plays a central role in our simulations. We discuss how our results map into observed historical outcomes and assess how robust our findings are.
    JEL: H56 N40 P48
    Date: 2020–09
  29. By: Andersson, Fredrik N. G. (Department of Economics, Lund University)
    Abstract: There is a never-ending quest for a stable economy with full employment and low inflation. Economists have suggested and policymakers have experimented with different fiscal and monetary policy regimes since at least the beginning of the industrial revolution. In this paper, we study Swedish stabilization policies through six policy regimes between 1873 and 2019. We focus on discretionary stabilization policies by estimating policy shocks. We then explore how Swedish stabilization policies have evolved over time through these shocks: how different institutional setups affected the policies and how policymakers responded to key economic events such as financial crises and wars.
    Keywords: monetary policy; fiscal policy; policy shocks; stabilization policies: financial crisis
    JEL: E42 E43 E52 E58 E62 E65
    Date: 2020–08–26
  30. By: Chen, Shuo (Fudan University, China); Xie, Bin (Jinan University)
    Abstract: The Chinese Exclusion Act of 1882 banned Chinese immigration and institutionalized discrimination against Chinese in U.S. society. This study examines the impact of institutional discrimination on the assimilation of Chinese by exploiting the passage of the Act and the state-level variation in the intensity of discrimination, measured by the voting outcomes of the Act and the number of anti-Chinese incidents. Our difference-in-differences estimates show that discrimination substantially slowed the occupational assimilation of Chinese in the Exclusion Era (1882–1943) and that Chinese in the U.S. reacted to discrimination by investing in human capital, improving English skills, and increasingly adopting Americanized names. The triple difference estimates show that these effects are significantly stronger in states with higher support rates of the Act or greater numbers of anti-Chinese incidents. These findings are not driven by the selection in migration and fertility.
    Keywords: the Chinese Exclusion Act, assimilation, human capital, name Americanization
    JEL: J15 N31 K37
    Date: 2020–08
  31. By: Abhay Aneja; Guo Xu
    Abstract: We link personnel records of the federal civil service to census data for 1907-1921 to study the segregation of the civil service by race under President Woodrow Wilson. Using a difference-in-differences design to compare the black-white wage gap around Wilson's presidential transition, we find that the introduction of employment segregation increased the black wage penalty by 7 percentage points. This gap increases over time and is driven by a reallocation of already-serving black civil servants to lower paid positions. Our results thus document significant costs borne by minorities during a unique episode of state-sanctioned discrimination.
    JEL: J15 J45 M5 N4
    Date: 2020–09
  32. By: Haelim Anderson; Selman Erol; Guillermo Ordoñez
    Abstract: Central banks provide public liquidity to traditional (regulated) banks with the intention of stabilizing the financial system. Shadow banks are not regulated, yet they indirectly access such liquidity through the interbank system. We build a model that shows how public liquidity provision may change the linkages between traditional and shadow banks, increasing systemic risk through three channels: reducing aggregate liquidity, expanding fragile short-term borrowing, and crowding out of private cross-bank insurance. We show that the creation of the Federal Reserve System and the provision of public liquidity changed the structure and nature of the U.S. interbank network in ways that are consistent with the model and its implications. We provide empirical evidence by constructing unique data on balance sheets and detailed disaggregated information on payments and funding connections in Virginia.
    JEL: D53 D85 E02 E44 G11 G21 G23 N21
    Date: 2020–08
  33. By: Harald Badinger (Department of Economics, Vienna University of Economics and Business); Stefan Schiman (Austrian Institute of Economic Research (WIFO))
    Abstract: We propose a novel identification strategy to measure monetary policy in a structural VAR. It is based exclusively on known past policy shocks, which are uncovered from high-frequency data, and does not rely on any theoretical a-priori restrictions. Our empirical analysis for the euro area reveals that interest rate decisions of the ECB surprised financial markets at least fifteen times since 1999. This information is used to restrict the sign and magnitude of the structural residuals of the policy rule equation at these shock dates accordingly. In spite of its utmost agnostic nature, this approach achieves strong identification, suggesting that unexpected ECB decisions have an immediate impact on the short-term money market rate, the narrow money stock, commodity prices, consumer prices and the Euro-Dollar exchange rate, and that real output responds gradually. Our close to assumption-free approach obtains as an outcome what traditional sign restrictions on impulse responses impose as an assumption.
    Keywords: Structural VAR, Set Identification, Monetary Policy, ECB
    JEL: C32 E52 N14
    Date: 2020–07

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.