nep-his New Economics Papers
on Business, Economic and Financial History
Issue of 2022‒09‒26
29 papers chosen by
Bernardo Bátiz-Lazo
Northumbria University

  1. The Slaughter of the Bison and Reversal of Fortunes on the Great Plains By Feir, Donn. L.; Gillezeau, Rob; Jones, Maggie E. C.
  2. Free-Riding Yankees: Canada and the Panama Canal By Sebastian Galiani; Luis F. Jaramillo; Mateo Uribe-Castro
  3. From the historical Roman road network to modern infrastructure in Italy By Luca De Benedictis; Vania Licio; Anna Pinna
  4. Transatlantic Roads to Mont Pèlerin: "Old Chicago" and Freiburg in a World of Disintegrating Orders By Kolev, Stefan; Köhler, Ekkehard A.
  5. Milton Friedman: An Early Advocate of Dollarization? By Emilio Ocampo
  6. Vote Early and Vote Often? Detecting Electoral Fraud from the Timing of 19th Century Elections By Francesco Ferlenga; Brian G. Knight
  7. Interbank Networks and the Interregional Transmission of Financial Crises: Evidence from the Panic of 1907 By Matthew Jaremski; David C. Wheelock
  8. La política económica neoclásica en América Latina: génesis y consecuencias de cuatro décadas perdidas en el desarrollo latinoamericano, 1980-2020 By Sánchez-Masi, Luis
  9. Influenza Mortality in French Regions after the Hong Kong Flu Pandemic By Florian Bonnet; Hippolyte d'Albis; Josselin Thuilliez
  10. The Political Economy of the Decline in Antitrust Enforcement in the United States By Lancieri, Filippo; Posner, Eric; Zingales, Luigi
  11. Farm Labor, Human Capital, and Agricultural Productivity in the United States By Wang, Sun Ling; Hoppe, Robert A.; Hertz, Thomas; Xu, Shicong
  12. On The History and The Mathematics of The Wold-Juréen (1953) Utility Function, And Its Basis For The Modeling of Giffen Behavior By Sproule, Robert
  13. Shipping Prices and Import Price Inflation By Maggie Isaacson; Hannah Rubinton
  14. The political consequences of mass repatriation By Edoardo Cefalà
  15. Automation After the Assembly Line: Computerized Machine Tools, Employment and Productivity in the United States By Leah Platt Boustan; Jiwon Choi; David Clingingsmith
  16. New Frontiers: The Origins and Content of New Work, 1940–2018 By David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
  17. When Death was Postponed: The Effect of HIV Medication on Work and Marriage By Mette Ejrnæs; Esteban García-Miralles; Mette Gørtz; Petter Lundborg
  18. On the macroeconomic and distributional effects of federal estate tax reforms in the United States By Pieter Van Rymenant; Freddy Heylen; Dirk Van de gaer
  19. Causal Effects of Early Career Sorting on Labor and Marriage Market Choices: A Foundation for Gender Disparities and Norms By Itzik Fadlon; Frederik Plesner Lyngse; Torben Heien Nielsen
  20. Dynamics of First-Time Patenting Firms By Nilsen, Øivind A.; Raknerud, Arvid
  21. Accelerating housing inequality: property investors and the changing structure of property ownership in Luxembourg By Mezaroş, Mădălina; Paccoud, Antoine
  22. When the Celtic Tiger relaxed its corporate tax bite: An analysis of the effects on the top and upper middle income shares in Ireland By Niklas Uliczka
  23. A possibilist justification of the ontology of counterfactuals and forecasted states of economies in economic modelling By Imko Meyenburg
  24. Childhood Vaccinations and Demographic Transition: Long-Term Evidence from India By Nandi, Arindam; Summan, Amit; Ngô, D. Thoai; Bloom, David E.
  25. Trade Credit and Sectoral Comovement during Recessions By Jorge Miranda-Pinto; Gang Zhang
  26. Inflación en Israel: el caso del programa de estabilización económica de 1985 By Zizmond, Marisa Adriana
  27. Entrepreneurship in the long-run: Empirical evidence and historical mechanisms By Michael Fritsch; Michael Wyrwich
  28. Famous after Death: The Effect of a Writer's Death on Book Sales By Ponzo, Michela; Scoppa, Vincenzo
  29. What Purpose Do Corporations Purport? Evidence from Letters to Shareholders By Rajan, Raghuram G.; Ramella, Pietro; Zingales, Luigi

  1. By: Feir, Donn. L. (University of Victoria); Gillezeau, Rob (University of Victoria); Jones, Maggie E. C. (University of Victoria)
    Abstract: In the late nineteenth century, the North American bison was brought to the brink of extinction in just over a decade. We demonstrate that the loss of the bison had immediate, negative consequences for the Native Americans who relied on them and ultimately resulted in a permanent reversal of fortunes. Once amongst the tallest people in the world, the generations of bison-reliant people born after the slaughter lost their entire height advantage. By the early twentieth century, child mortality was 16 percentage points higher and the probability of reporting an occupation 29.7 percentage points lower in bison nations compared to nations that were never reliant on the bison. Throughout the latter half of the twentieth century and into the present, income per capita has remained 28% lower, on average, for bison nations. This persistent gap cannot be explained by differences in agricultural productivity, self-governance, or application of the Dawes Act. We provide evidence that this historical shock altered the dynamic path of development for formerly bison-reliant nations. We demonstrate that limited access to credit constrained the ability of bison nations to adjust through respecialization and migration.
    Keywords: North American Bison, Buffalo, extinction, economic history, Native Americans, indigenous, income shock, intergenerational mobility
    JEL: I15 J15 N31 N32 O10
    Date: 2022–08
  2. By: Sebastian Galiani; Luis F. Jaramillo; Mateo Uribe-Castro
    Abstract: We study the impact of the Panama Canal on the development of Canada’s manufacturing sector in the years from 1900 to 1939. Using newly digitized county-level data from the Census of Manufactures and a market-access approach, we exploit the plausibly exogenous nature of this historical episode to study how changes in transportation costs influence the location of economic activity and productivity dynamics. Our reduced-form estimates show that lowered shipping costs led to greater market integration of marginally productive Canadian counties with key markets both inside and outside of Canada. This development permitted the reallocation of production activity to places whose production levels had been inefficiently low before the Canal opened. A shift from the 25th to the 75th percentile in terms of gains in market access brought about by the opening of the Canal led to a 9% increase in manufacturing revenues and input expenditures. Productivity rose by 13%. These effects persist when general equilibrium effects are considered: the closure of the Canal in 1939 would have resulted in economic losses equivalent to 1.86% of GDP, chiefly as a result of the restriction of the country’s access to international markets. Altogether, these results suggest that the Canal substantially altered the economic geography of the Western Hemisphere in the first half of the twentieth century.
    JEL: O1
    Date: 2022–08
  3. By: Luca De Benedictis; Vania Licio; Anna Pinna
    Abstract: An integrated and widespread road system, like the one built during the Roman Empire in Italy, plays an important role today in facilitating the construction of new infrastructure. This paper investigates the historical path of Roman roads as main determinant of both motorways and railways in the country. The empirical analysis shows how the modern Italian transport infrastructure followed the path traced in ancient times by the Romans in constructing their roads. Being paved and connecting Italy from North to South, consular trajectories lasted in time, representing the starting physical capital for developing the new transport networks.
    Date: 2022–08
  4. By: Kolev, Stefan; Köhler, Ekkehard A.
    Abstract: This paper depicts the co-evolution of the political economies of the "Old Chicago" and Freiburg Schools. These communities within the "laissez-faire within rules" research program and the long-standing "thinking-in-orders" tradition emerged in the 1930s and culminated in the 1940s into a surprisingly coherent stream of institutional economic thought, crystallizing around the personalities of Henry C. Simons and Walter Eucken. We show how, in an age of disintegration of national and international orders of economy and society, the political economists at Chicago and Freiburg underwent a double transition: From students of equilibrium to students of order, as well as from students of various positive orders to defenders of a specific normative order. The normative order of the economy on both sides of the Atlantic was the competitive order and its rules-based framework. Along with shared angst amid disintegrating orders, personal transatlantic connections between the two communities are identified, starting in Berlin during the 1920s. We highlight the special role of Friedrich A. Lutz who, from the mid-1930s to Eucken's passing in 1950 and beyond, served as a lifeline between the isolated Freiburg School and US economists. Lutz's activities are embedded in a narrative of transatlantic conversations around Friedrich A. Hayek and the early meetings of the Mont Pèlerin Society.
    Keywords: Neoliberalism,Chicago School,Freiburg School,Mont Pèlerin Society,Henry C. Simons,Walter Eucken,Friedrich A. Lutz,Friedrich A. Hayek
    JEL: A11 B25 B31 H11 P16
    Date: 2021
  5. By: Emilio Ocampo
    Abstract: Milton Friedman’s longstanding advocacy in favor of floating exchange rates has contributed to a mistaken belief that he opposed currency board regimes or outright dollarization. Nothing could be further from the truth. Over a period of almost five decades Friedman consistently made it clear that he favored floating exchange rates for advanced nations but not for developing nations. In fact, he was one of the earliest advocates of dollarization for countries suffering from high and chronic inflation such as Argentina. Interestingly, it is rarely known that one of the earliest debates on the advantages and disadvantages of dollarization and currency boards took place in 1973 in Washington, D.C., during a Congressional Hearing which pitted Friedman against Argentine economist Ricardo Arriazu. The purpose of this brief note is to trace the evolution of Friedman’s thinking on the subject from the mid 1950s until his death and the events that influenced it.
    Keywords: Milton Friedman, Foreign Exchange Rate Regimes, Currency Boards, Dollarization, Monetary Policy, Argentina
    JEL: B2 B17 B3 B22 B27 F31 F32 O24
    Date: 2022–08
  6. By: Francesco Ferlenga; Brian G. Knight
    Abstract: This paper develops a new approach to detecting electoral fraud. Our context involves repeaters, individuals voting in multiple states in the U.S. during 19th Century Congressional Elections. Given high travel times, and the associated difficulties of voting in multiple states on the same day, we exploit the staggered introduction of holding federal elections on the first Tuesday after the first Monday in November (1T1M). The key finding is that county-level turnout rates fell when the closest neighboring state coordinated on 1T1M. This result is consistent with 1T1M adoption making repeating more difficult. In terms of mechanisms, the pattern is stronger in states that had not yet adopted the secret ballot, consistent with the secret ballot itself reducing voter fraud. The pattern is also driven by smaller population counties, consistent with repeaters particularly inflating turnout rates in these places.
    JEL: D70 H7 P0
    Date: 2022–08
  7. By: Matthew Jaremski; David C. Wheelock
    Abstract: This paper provides quantitative evidence on the interbank network’s role in transmitting the Panic of 1907 across the United States. Originating in a few New York City banks and trust companies, the panic led to payment suspensions and emergency currency issuance in many cities. Data on the universe of correspondent relationships shows that i) suspensions were more likely in cities whose banks had closer ties to New York, ii) banks with correspondents at the Panic’s center were more likely to close, and iii) banks responded to the panic by rearranging their correspondent relationships, with implications for network structure.
    Keywords: banking panics; interbank networks; contagion; bank closures; panic of 1907
    JEL: E42 E44 G01 G21 N11 N21
    Date: 2022–09
  8. By: Sánchez-Masi, Luis
    Abstract: The aim of this article is to examine the effectiveness of economic policies based on neoclassical principles which have been implemented in most of Latin American countries since the eighties. Since then, the region has been losing relative importance in the world. The lag in the last “four lost decades” es quite general and compelling. Rather than eliminating the asymmetric relationship between developed and underdeveloped countries, the historical evidence suggests it is perpetuated by the neoclassical economic policy. In Latin America the neoclassical principles such as free market and international free trade have tended to preserve the same productive structure, thus promoting an erratic development, which depends on the demand and prices of primary products. Until now, no underdeveloped country has reached the first world by applying economic policies based on neoclassical principles. The Asian countries which performed that transition applied policies and strategies opposed to neoclassical principles. Raul Prebisch’s analyses about the inconsistency of neoclassical economic policy with Latin American reality are today as valid as seven decades ago. However, for the great majority of Latin American economists is simply inconceivable that basic principles of neoclassical theory may produce adverse effects on underdeveloped countries. Latin America must rethink the economic policy and strategy for attaining its development.
    Keywords: Latin America; economic policy; neoclassical economics
    JEL: N16 O24
    Date: 2022–07–01
  9. By: Florian Bonnet (INED - Institut national d'études démographiques); Hippolyte d'Albis (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Josselin Thuilliez (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Influenza mortality has dramatically decreased in France since the 1950s. Annual death rates peaked during two pandemics: the Asian flu (1956-57) and the Hong-Kong flu (1969-1970). This study's objective is to evaluate whether the second pandemic created a structural change in the dynamics of influenza mortality in France. We employ a new database on influenza mortality since 1950 at the subnational level (90 geographic areas) to estimate statistical models to find whether a structural change happened and to explain the differences in mortality rates across geographic areas. Influenza mortality increased between 1950 and 1969, and decreased from 1970 onward. The Hong-Kong flu is identified as the event of a structural break. After the break, geographical differences are less explained by regional characteristics such as income, density or aging ratio. Hong Kong flu was found to be associated with a major change in influenza mortality in France. Change in health practices and policies induced a decline in mortality that started in 1970, just after the pandemics. The health benefits are notably important for senior citizens and for the poorest regions.
    Date: 2022–08
  10. By: Lancieri, Filippo; Posner, Eric; Zingales, Luigi
    Abstract: Antitrust enforcement in the United States has declined since the 1960s. We investigate the political causes of this decline by looking at who made the crucial decisions and the strength of their popular mandate. Using a novel framework to understand the determinants of regulatory capture and several new datasets, we find that there was no public support for the weakening of antitrust enforcement. The decline in antitrust enforcement was the result of a collection of technocratic decisions made in politically unaccountable ways, mostly by regulators and judges. Behind the scenes, big business played a major role in influencing these agents; but other factors (like the increase in private sector pay relative to government pay) and intellectual currents mattered as well.
    Date: 2022
  11. By: Wang, Sun Ling; Hoppe, Robert A.; Hertz, Thomas; Xu, Shicong
    Abstract: During the 20th century, U.S. agricultural employment fell in absolute numbers and as a share of total U.S. employment—the latter from 33 percent in 1910 to about 2 percent in 2017. According to USDA, Economic Research Service agricultural productivity data, total farm output almost tripled, and total labor use declined by nearly 80 percent in the last seven decades, implying that farm output per worker, a single factor productivity measure, grew. This report discusses the contribution of farm labor in U.S. agricultural growth and assesses the changing composition of the U.S. farm labor force with special attention to the changes in educational attainment among farm operators and other workers. The authors found that between 1948 and 2017, the decline in total labor hours worked accounted for -0.57 percentage points per year in annual output growth. These negative effects were partially offset by increasing labor quality, such as increased educational attainment. In the growth accounting frame-work, increased educational attainment accounts for about 8 percentage points of annual agricultural output growth. The average annual rates of labor productivity growth and total factor productivity growth would have been overstated by 13 percent and 8 percent, respectively, if labor quality changes were not accounted for in the measurement.
    Keywords: Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Farm Management, Industrial Organization, Labor and Human Capital, Production Economics, Research Methods/ Statistical Methods
    Date: 2022–02–15
  12. By: Sproule, Robert
    Abstract: Twenty years ago, Peter Moffatt (2002) posed this general question: “Is Giffen behavior compatible with the axioms of consumer theory?” The present paper addresses this very same question, but only as it applies to the Wold-Juréen (1953) utility function. In this paper, we demonstrate that the Wold-Juréen (1953) utility function exhibits both Giffenity and compatibility with the axioms of consumer theory. Our singular interest in the Wold-Juréen (1953) utility function stems from the fact that this utility function continues to be the preeminent theoretical benchmark in the study of Giffenity.
    Keywords: Wold-Juréen (1953) utility function,Slutsky decomposition,Giffen Behavior,Axioms of Consumer Theory
    JEL: A22 A23 D11
    Date: 2022
  13. By: Maggie Isaacson; Hannah Rubinton
    Abstract: During the pandemic there have been unprecedented increases in the cost of shipping goods accompanied by delays and backlogs at the ports. At the same time, import price inflation has reached levels unseen since the early 1980s. This has led many to speculate that the two trends are linked. In this article, we use new data on the price of shipping goods between countries to analyze the extent to which increases in the price of shipping can account for the increase in U.S. import price inflation. We find that the pass-through of shipping costs is small. Nevertheless, because the rise in shipping prices has been so extreme, it can account for between 3.60 and 5.87 percentage points per year of the increase in import price inflation during the post-Pandemic period.
    Keywords: inflation; shipping; trade
    JEL: E31 F15
    Date: 2022–08–30
  14. By: Edoardo Cefalà
    Abstract: What happens when the electorate of a country is suddenly increased by hundreds of thousands of new potential voters? How do parties adjust their strategies in response to such an event? To address these questions I exploit a quasi-experiment represented by the arrival in France of about 1 million repatriates from Algeria, the so-called pieds noirs, which happened in 1962. To study the causal impact of the pieds noirs on voting, I instrument their location choice based on the average temperature by department. I find that the arrival of the pieds noirs increased turnout and the vote share of far-right parties while it decreased the vote share of center-right parties in both legislative and presidential elections between 1962 and 1974. I then analyse how this shock affected the political strategies of the different French parties by looking at more than 10,000 political manifestos issued by candidates in the legislative elections during the same period. I show that far-right parties behaved as a political entrepreneur and started to discuss issues associated with the pieds noirs already in 1962. The other parties subsequently adapted their manifestos using the same words of the far-right. These findings shed light on how radical parties can affect mainstream ones by pushing new issues in their agenda.
    Keywords: mass repatriation; pieds noirs; vote share
    Date: 2022
  15. By: Leah Platt Boustan; Jiwon Choi; David Clingingsmith
    Abstract: Since the 1970s, computerized machine tools have been replacing semi-skilled manufacturing workers, contributing to factory automation. We build a novel measure of exposure to computer numerical control (CNC) based on initial variation in tool types across industries and differential shifts toward CNC technology by tool type over time. Industries more exposed to CNC increased capital investment and experienced higher labor productivity. Total employment rose, with gains for college-educated workers and abstract tasks compensating for losses of less-educated workers and routine tasks. Employment gains were strongest for unionized jobs. Workers in exposed industries returned to school and relevant degree programs expanded.
    JEL: J24 N32
    Date: 2022–08
  16. By: David Autor; Caroline Chin; Anna M. Salomons; Bryan Seegmiller
    Abstract: We address three core questions about the hypothesized role of newly emerging job categories ('new work') in counterbalancing the erosive effect of task-displacing automation on labor demand: what is the substantive content of new work; where does it come from; and what effect does it have on labor demand? To address these questions, we construct a novel database spanning eight decades of new job titles linked both to US Census microdata and to patent-based measures of occupations’ exposure to labor-augmenting and labor-automating innovations. We find, first, that the majority of current employment is in new job specialties introduced after 1940, but the locus of new work creation has shifted—from middle-paid production and clerical occupations over 1940–1980, to high-paid professional and, secondarily, low-paid services since 1980. Second, new work emerges in response to technological innovations that complement the outputs of occupations and demand shocks that raise occupational demand; conversely, innovations that automate tasks or reduce occupational demand slow new work emergence. Third, although flows of augmentation and automation innovations are positively correlated across occupations, the former boosts occupational labor demand while the latter depresses it. Harnessing shocks to the flow of augmentation and automation innovations spurred by breakthrough innovations two decades earlier, we establish that the effects of augmentation and automation innovations on new work emergence and occupational labor demand are causal. Finally, our results suggest that the demand-eroding effects of automation innovations have intensified in the last four decades while the demand-increasing effects of augmentation innovations have not.
    JEL: E24 J11 J23 J24
    Date: 2022–08
  17. By: Mette Ejrnæs (University of Copenhagen and CEBI); Esteban García-Miralles (Bank of Spain); Mette Gørtz (University of Copenhagen and CEBI); Petter Lundborg (IZA and Department of Economics, Lund University)
    Abstract: Over the last century, global life expectancy has increased tremendously. A longer planning horizon may change individuals’ incentives to work, save, and marry but it has proven challenging to disentangle such incentive effects from those of improved health. In this paper, we study how individuals diagnosed with HIV reacted to the introduction of HIV medicine in 1995, which dramatically increased their life expectancy. To isolate the incentive effect, we use Danish register data on HIV-infected individuals and compare how outcomes evolved for individuals who were diagnosed before and after the medicine was introduced, but whose health had not yet been affected by their HIV diagnosis. Our results show that increases in the life expectancy of HIV-infected individuals greatly reduced the negative effect of receiving a HIV diagnosis on labor supply and earnings but did not affect important financial decisions, despite a much longer investment horizon. An increased life expectancy also affected marital behavior, where those facing a longer life expectancy where less likely to marry or cohabit after receiving a HIV diagnosis. Our results highlight that life expectancy gains from medical innovations impact individuals’ incentives to work and marry, even when their underlying health is unchanged.
    Keywords: Life Expectancy, Labor Supply, Marriage, HIV
    JEL: D84 I12 J12 J21
    Date: 2022–07–19
  18. By: Pieter Van Rymenant; Freddy Heylen; Dirk Van de gaer (-)
    Abstract: This paper studies the effects of the sharp decline since 1980 in U.S. federal estate taxes on the past and future evolution of per capita growth, labor supply, the wealth-to-GDP ratio (capital-output ratio), the real interest rate, and cross-sectional wealth inequality and concentration. To do so, we construct, calibrate, and simulate a dynamic general equilibrium model featuring firms, a fiscal government, and overlapping generations of heterogeneous households connected via bequests and inter-vivos transfers. The model includes crucial elements in the debate on the effects of estate tax changes and accounts for structural developments in recent decades, such as demographic change and ‘skill-biased’ technological progress. It replicates key U.S. data since the 1960s quite well. We find that the studied estate tax reforms have not generated the desired positive effects on labor supply, private capital formation, and economic activity. Rather, they have contributed considerably to rising aftertax wealth inequality and concentration and explain a fraction of the long-term decline in the real interest rate. The key underlying result from our simulations is that the aggregate stocks of pre-tax wealth and pre-tax bequests are insensitive to changes in the estate tax, even when all households have an after-tax bequest motive. As a result, the foregone estate tax revenues are large.
    Keywords: Wealth inequality, economic growth, bequests, estate tax, OLG model
    JEL: E17 E21 E27 E62
    Date: 2022–09
  19. By: Itzik Fadlon (University of California, San Diego and NBER); Frederik Plesner Lyngse (University of Copenhagen and CEBI); Torben Heien Nielsen (University of Copenhagen and CEBI)
    Abstract: We study whether and how early labor market choices determine longer-run career versus family outcomes differentially for male and female professionals. We analyze the physician labor market by exploiting a randomized lottery that determines the sorting of Danish physicians into internships across local labor markets. Using administrative data spanning ten years after physicians’ graduations, we find causal effects of early-career sorting on a range of life cycle outcomes that cascade from labor market choices, including human capital accumulation and occupational choice, to marriage market choices, including matching and fertility. The persistent effects are entirely concentrated among women, whereas men experience only temporary career disruptions. The evidence points to differential family-career tradeoffs and the mentorship employers provide as channels underlying this gender divergence. Our findings have implications for policies aimed at gender equality in outcomes, as they reveal how persistent gaps can arise even in institutionally gender-neutral settings with early-stage equality of opportunity.
    Keywords: Economics of Gender, Human Capital, Occupational Choice, Marriage Market, Fertility, Career versus Family Tradeoff, Early Career Sorting
    JEL: J16 J13 J24 R23
    Date: 2022–07–19
  20. By: Nilsen, Øivind A. (Dept. of Economics, Norwegian School of Economics and Business Administration); Raknerud, Arvid (SSB)
    Abstract: This paper investigates firm dynamics in the period before, during, and after an event consisting of a first published patent application. The analysis is based on patent data from the Norwegian Industrial Property Office merged with data from several business registers covering a period of almost 20 years. We apply an event study design and use matching to control for confounding factors. The first patent application by a young firm is associated with significant growth in employment, output, assets and public research funding. Moreover, our results indicate that economic activity starts to increase at least three years ahead of the first patent application. However, we find no evidence of additional firm growth after patent approval for successful applicants. Our findings indicate that the existence of a properly functioning patenting system supports innovation activities, especially early in the life cycle of firms.
    Keywords: Patenting; Firm performance; Panel data; Event study design
    JEL: C33 D22 O34
    Date: 2022–08–30
  21. By: Mezaroş, Mădălina; Paccoud, Antoine
    Abstract: This paper tracks the arrival of investors in the housing market of Dudelange, Luxembourg. In so doing, it focuses on the socio-economic changes accompanying the transformation of homes into assets, since the first apartment was built in the city in the mid-1960s until 2018. Drawing on complete land registry data, we chart the structure of apartment ownership in the context of the city’s transition from an industrial to a financialised economy, with particular attention to three characteristics of buyers: age at purchase, country of birth and occupation. We investigate how homeowner characteristics have shifted over time in a context where housing policies have incentivised investor activity and demand. We highlight how three policies put in place in the early 2000s to encourage real estate investments seem to have strengthened the position of the group already most advantaged on the Luxembourg housing market: those born in Luxembourg and over 45 years of age. Given that this group has on average the highest median incomes and the highest homeownership rates, we argue that these policies that incentivised property investments are likely to have accelerated housing (and wider) inequalities in an overheated housing market.
    Keywords: property wealth; homeownership; housing inequality; policy
    JEL: R14 J01
    Date: 2022–08–24
  22. By: Niklas Uliczka
    Abstract: In 1997, the Irish government introduced reforms to revolutionize corporate taxation, with focus on creating opportunities for tax neutrality and on reducing the standard corporate tax rate. This paper studies the relationship between this Irish corporate tax reform and income shares at the top and the upper middle of the distribution. Using the synthetic control method, findings suggest that the reforms had large positive effects on the income share of the top 1% and sizeable negative effects on the upper middle 40% of income earners. Such heterogenous effects indicate increasing income inequality due to targeted corporate tax incentives.
    Date: 2022–09
  23. By: Imko Meyenburg (ARU - Anglia Ruskin University)
    Abstract: Economists, like any other social scientist, apply various methodologies and theories in their research to ultimately tell true stories about the world we live in. Moreover, and specifically, they use counterfactual modelling and forecasting to also construct narratives of possible or future states of the economy, which evade classical empirical validation but nonetheless could be true. In this paper, we firstly claim that there is an intuitive notion that those statements about possible states of the economy, or its future state, could be true even in the absence of this empirical validation. To solve this problem, we will make use of modal logic and Lewisian possible world semantics, the idea that statements containing possibilities and necessities are true if they are true in some or all logically possible worlds. Furthermore, we argue that we can be ontologically committed to these postulated possible or future states of economies via commitment to said possible worlds. In other words, possible world semantics allows us to formally analyse our intuitions about the truthfulness of possibility statements arrived by from the use of postulated entities, economies, and worlds.
    Keywords: ontology,semantics,forecasts,epistemology,modelling,possible worlds,possible worlds JEL classification: B1,B16,B23,B59
    Date: 2022–08–18
  24. By: Nandi, Arindam (The Population Council); Summan, Amit (One Health Trust); Ngô, D. Thoai (The Population Council); Bloom, David E. (Harvard University)
    Abstract: Childhood vaccines can increase population growth in the short term by improving the survival rates of young children. Over the long run, reductions in child mortality rates are associated with lower demand for children and fertility rates (known as "demographic transition"). Vaccines can potentially aid demographic transition by lowering child mortality and improving future health, schooling, and labor market outcomes of vaccinated mothers, but these long-term demographic benefits remain untested. In this study, we examine the demographic effects of India's national childhood vaccination program (the Universal Immunization Programme or UIP). We combine data on the district-wise rollout of UIP during 1985–1990 with fertility preference data of 625,000 adult women from the National Family Health Survey of India 2015–2016. We include women who were born five years before and after the rollout period (1980–1995) and were cohabiting with a partner at the time of the survey. We divide these 20-36-year-old women into two groups: those who were exposed to UIP at birth (treatment group) and those who were born before the program (control group). After controlling for individual- and household-level factors and age and district fixed effects, treatment group women are 2% less likely to have at least one child and want 2% fewer children in their lifetime as compared with the control group. The negative effect on at least one childbirth is larger for more educated and richer women, while the effect on the desired number of children is larger for uneducated and poorer women.
    Keywords: India, UIP, demographic transition, demand for fertility
    JEL: I15 J13 J18 I10
    Date: 2022–08
  25. By: Jorge Miranda-Pinto; Gang Zhang
    Abstract: We show that sectoral comovement did not change for any post-war US recession, with the only exception of the Great Recession. Using sector-level and firm-level data, we argue that this large increase was driven mainly by the endogenous response of firm-to-firm credit (trade credit). We then develop a multisector model with inputoutput linkages, financial frictions, and endogenous supply of trade credit and show that the financial shocks after Lehman Brothers’ collapse triggered a response of trade credit that can qualitatively and quantitatively account for the large shift in comovement. A model with fixed trade-credit, subject to the same productivity and financial shocks, generates no increase in comovement and implies a 20% smaller decline in GDP than in the endogenous case. In contrast, we show that trade credit in the other previous recessions acted as a cushion that mitigated negative sectoral spillovers.
    Date: 2022–08
  26. By: Zizmond, Marisa Adriana
    Abstract: Israel constituye un caso paradigmático debido al éxito alcanzado a la hora de controlar la inflación. Con la implementación del Programa de Estabilización Económica en el año 1985 logró reducir los niveles de inflación de manera inmediata y permanente desde 450 por ciento anual a mediados de dicho año, al 20 por ciento anual a inicios de 1986, confluyendo hacia la estabilidad de precios en el año 2000. Los resultados indican que la baja de la inflación además fue acompañada por una mejora de la posición externa, un aumento poco significativo de la tasa de desempleo y sin sufrir grandes recesiones. Por lo cual, este estudio tiene como objetivo principal el de analizar el Programa de Estabilización Económica aplicado en Israel a partir del primero de julio del año 1985 (medidas, resultados macroeconómicos y sus impactos en los distintos sectores de la población) contrastando los mismos con los derivados de los acuerdos por paquete aplicados a partir de noviembre de 1984, los que resultaron ineficaces. A tal fin se procede a realizar un análisis de las principales teorías de la inflación, y de las variables económicas fundamentales antes y después de la implementación del Programa en Israel. Se procederá a la descripción del Programa explicando los motivos de las medidas adoptadas por los policymakers, relacionándolo con las diferentes propuestas teóricas, identificando los objetivos logrados y contrastándolo con los acuerdos por paquete.
    Keywords: Inflación; Políticas Públicas; Desequilibrio Económico; Estabilizacion Económica; Israel; 1985;
    Date: 2022–05–05
  27. By: Michael Fritsch; Michael Wyrwich
    Abstract: We review and discuss research on the development of regional entrepreneurship over time. A particular focus is on the long-term persistence of regional levels of entrepreneurship, its explanation, and its meaning for economic development. What is the state of empirical research in this field, and what can explain the empirical findings? How are long-term trends of entrepreneurial activity linked to regional performance in terms of employment, gross domestic product (GDP), and innovative activity? Based on our assessments we derive conclusions for theory, policy implications, and avenues for further research.
    Keywords: Entrepreneurship, self-employment, regional growth, entrepreneurial culture, historical analysis
    JEL: L26 M13 O1 O33 R11
    Date: 2022–08
  28. By: Ponzo, Michela (University of Calabria); Scoppa, Vincenzo (University of Calabria)
    Abstract: In the standard neoclassical model consumers use all the available information and the demand for goods depends exclusively on preferences and prices whereas other spurious information do not play any role. In the market for books, we investigate if – in contrast to the standard model – the death of a writer has an impact on demand for his/her books, that is, we ask if consumers are affected by factors such as emotions and limited attention, as highlighted in behavioral economics. We use bestseller lists at week level for about 30 years (1975-2005) and through a Regression Discontinuity Design we evaluate the impact of a writer's death on the probability of entering in the bestseller list in the period immediately following his/her death. Controlling for age, gender, literary prizes, publishers' relevance and time dummies we find that a writer's death increases the probability of being in the bestseller list of more than 100%. Using a non-parametric RD approach we find very similar results. A number of robustness checks – changing the time window around the death, the estimation method, the outcome variable, the sample used – confirm our findings. In the attempt to investigate which mechanism drives consumers' decisions, we find a much greater impact for writers dying at an early age, for more famous writers and when the news is covered more extensively, suggesting that emotions and media attention are the main drivers of the impact.
    Keywords: book sales, writer's death, emotions, limited attention, salience, cultural economics, behavioral economics
    JEL: D91 Z10 Z11 L82 M30 D12
    Date: 2022–08
  29. By: Rajan, Raghuram G.; Ramella, Pietro; Zingales, Luigi
    Abstract: Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United States, from 1955 to 2020. Corporate goals have proliferated during this period from an average of two in 1955 to almost 10 in 2020. We find a variety of factors are associated with a corporation stating a specific goal including advertising a firm's strengths, promising improved performance, signaling a commitment to specific constituencies, building societal legitimacy, and conforming to the behavior of other corporations. In spite of the proliferation of corporate goals, executive compensation is still overwhelmingly based on shareholder value, as measured by stock prices and financial performance. Yet, we do observe a rise in bonus payments made contingent on social and environmental objectives, especially among the signatories of the 2019 Business Roundtable statement on corporate purpose.
    Date: 2022

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