nep-hpe New Economics Papers
on History and Philosophy of Economics
Issue of 2013‒01‒26
twenty-six papers chosen by
Erik Thomson
University of Manitoba

  1. Use and abuse of authority: A behavioral foundation of the employment relation By Björn Bartling; Ernst Fehr; Klaus M. Schmidt
  2. The Evolution of Altruistic Preferences: Mothers versus Fathers By Alger, Ingela; Cox, Donald
  3. Primitivization of the EU Periphery: The Loss of Relevant Knowledge By Erik S. Reinert
  4. Protectionism and Protectionists Theories in the Balkans in the Interwar Period By Bertrand BLANCHETON; Nikolay NENOVSKY
  5. Predestination and the Protestant ethic By Larbi Alaoui; Alvaro Sandroni
  6. On the bottom-up foundations of the banking-macro nexus By Wäckerle, Manuel
  7. Mathematical structures of simple voting games By Machover, Moshé; Terrington, Simon
  8. Women Empowerment: An Epistemic Quest By Pillai N., Vijayamohanan; B. P., Asalatha
  9. International Monetary Coordination and the Great Deviation By John B. Taylor
  10. The Perverse Incentive of Knowing the Truth By Garcia-Martinez, Jose A.
  11. Accepting Zero in the Ultimatum Game: Selfish Nash Response? By Gianandrea Staffiero; Filippos Exadaktylos; Antonio M. Espín
  12. Who Gains from Information Asymmetry? By Gil S. Epstein; Yosef Mealem
  13. Divisia Monetary Aggregates, the Great Ratios, and Classical Money Demand Functions By Apostolos Serletis; Periklis Gogas
  14. Jacob Bielfeld's ''On the ''Decline of States''(1760) and its Relevance for Today By Erik S. Reinert
  15. Games With General Coalitional Structure By Selcuk, O.; Talman, A.J.J.
  16. Grandparents as Guards: A Game Theoretic Analysis of Inheritance and Post Marital Residence in a World of Uncertain Paternity By Brishti Guha
  17. Measuring trust, reciprocity and altruism by counterfactuals By Di Bartolomeo Giovanni; Papa Stefano
  18. The Average Tree Permission Value for Games with a Permission Tree By Brink, R. van den; Herings, P.J.J.; Laan, G. van der; Talman, A.J.J.
  19. On Bankruptcy Game Theoretic Interval Rules By Rodica Branzei; Marco Dall'Aglio; Stef H. Tijs
  20. Economic policy, democracy and all that in times of crisis By Sebastiano Fadda
  21. A non-cooperative approach to the ordinal Shapley rule By Vidal-Puga, Juan
  22. Esclavagisme et colonisation : Quelles conséquences contemporaines en Afrique ? - Résumé critique des travaux de l'économiste Nathan Nunn By Kodila-Tedika, Oasis
  23. A Prática Científica Nas Ciências Sociais By Santos, Miguel
  24. Breakdowns By Keller, Godfrey; Rady, Sven
  25. On the nucleolus of 2 x 2 assignment games By F. Javier Martinez de Albeniz; Carles Rafels; Neus Ybern
  26. Why Did the Netherlands Develop so Early? The Legacy of the Brethren of the Common Life By Bas ter Weel; Semih Akcomak; Dinand Webbink

  1. By: Björn Bartling; Ernst Fehr; Klaus M. Schmidt
    Abstract: Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach.
    Keywords: Theory of the firm, transaction cost economics, authority, power abuse, employment relation, fairness, reputation
    JEL: C91 D23 D86 M5
    Date: 2012–11
  2. By: Alger, Ingela (TSE (LERNA, CNRS) Univesité Toulouse 1 Capitole); Cox, Donald (Boston College)
    Abstract: What can evolutionary biology tell us about male-female differences in preferences concerning family matters? Might mothers be more solicitous toward offspring than fathers, for example? The economics literature has documented gender differences—children benefit more from money put in the hands of mothers rather than fathers, for example—and these differences are thought to be partly due to preferences. Yet for good reason family economics is mostly concerned with how prices and incomes affect behavior against a backdrop of exogenous preferences. Evolutionary biology complements this approach by treating preferences as the outcome of natural selection. We mine the well-developed biological literature to make a prima facie case for evolutionary roots of parental preferences. We consider the most rudimentary of traits—sex differences in gamete size and internal fertilization—and explain how they have been thought to generate malefemale differences in altruism toward children and other preferences related to family behavior. The evolutionary approach to the family illuminates connections between issues typically thought distinct in family economics, such as parental care and marriage markets.
    Date: 2012–12–31
  3. By: Erik S. Reinert
    Abstract: The European periphery . from Greece to Spain and the Baltic States . is hard hit by economic crises in the form of unemployment and falling real wages. The immediate reasons for these crises, .the straw that broke the nationsÿ backÿ so to say, are not the same. The countries in crisis may have had irresponsible budget deficits or irresponsible housing and prop-erty booms, but . as this article argues . the present underlying problems in the European Union can partly be attributed to ignoring previously well-understood economic insights and wisdom based on the interplay between geography, technology, and economic structure. This ignored knowledge abounds in the German-speaking literature, in this chapter represented by three economists: Heinrich von Thünen, Friedrich List, and Joseph Schumpeter, whose collective lives span from 1783 to 1950. Although all three worked in the periphery of what is normally referred to as The German Historical School of Economics, they all centered their analysis on a qualitative understanding of economic phenomena which disappeared from ruling economic theory, and consequently also from the understanding of politicians.
    Date: 2013–01
  4. By: Bertrand BLANCHETON; Nikolay NENOVSKY
    Abstract: This paper makes a comparative analysis between two unique theories of international trade and protectionism which emerged in Bulgaria and Romania during the period between the two World Wars as a response to the specific economic environment and the spread of economic ideas coming from economically developed countries. These are the general theory of protectionism based on Mihail Manoilescu’s (1891-1950) ideas of national productivity and the theory of international trade and productive forces forwarded by Konstantin Bobchev (1894-1976). Probing into the two theories allows the formulation of interesting academic and purely practical assertions and ideas that could help understand the trajectories and limits of the independent development of peripheral European economies. As in the past, so today, Bulgaria and Romania share more or less similar problems – those of the catching-up economies, lack of own capitals, severe strain on their balance of payments, dependence on the leading countries in the European Union, etc. Following this logic, a look back at the “protectionist past” of the Balkan countries opens new possibilities of highlighting the so-called Bairoch paradox, which claims the positive impact of protectionism on economic growth, and which in a sense comes into conflict with the main postulates of free international trade (Bairoch, 1999 [1993]; Becuwe, Blancheton, 2011).
    Keywords: economic thought, theories of protectionism, protectionism, Balkan economies, Bulgaria, Romania
    JEL: B30 N7
    Date: 2013
  5. By: Larbi Alaoui; Alvaro Sandroni
    Abstract: This paper shows an equivalence result between the utility functions of secular agents who abide by a moral obligation to accumulate wealth and those of religious agents who believe that salvation is immutable and preordained by God. This result formalizes Weber's renowned thesis on the connection between the worldly asceticism of Protestants and the religious premises of Calvinism. Furthermore, ongoing economies are often modeled with preference relations such as "Keeping up with the Joneses" which are not associated with religion. Our results relate these secular economies of today and economies of the past shaped by religious ideas.
    JEL: D0 D8
    Date: 2013–01
  6. By: Wäckerle, Manuel
    Abstract: The complexity of credit money is seen as the central issue in the banking-macro nexus, which the author considers as a structural as well as a process component of the evolving economy. This nexus is significant for the stability/fragility of the economic system because it links the monetary domain with the real domain of economic production and consumption. The evolution of credit rules shapes economic networks between households, firms, banks, governments and central banks in space and time. The author discusses the properties and characteristics of this process in three sections. First, he discusses the origins of the theory of money and its role in contemporary monetary economics. Second, he briefly discusses current theoretical foundations of top-down and bottom-up approaches to the banking-macro nexus, such as DSGE or ABM. Third, he suggests an evolutionary framework, building on the generic-rule based approach, to arrive at standards for bottom-up foundations in agent-based models of the banking-macro nexus. --
    Keywords: 20th century origins of the theory of money,Schumpeterian credit-driven innovation,Post-Keynesian endogenous money,top-down versus bottom-up,evolutionary institutional approach to bank lending,generic credit rules as bottom-up foundations
    JEL: E41 G21 B52 B25 C63 E51
    Date: 2013
  7. By: Machover, Moshé; Terrington, Simon
    Abstract: We address simple voting games (SVGs) as mathematical objects in their own right, and study structures made up of these objects, rather than focusing on SVGs primarily as co-operative games. To this end it is convenient to employ the conceptual framework and language of category theory. This enables us to uncover the underlying unity of the basic operations involving SVGs.
    Keywords: Simple games; Lattice of simple games; Category
    JEL: D7 C71
    Date: 2013–01–11
  8. By: Pillai N., Vijayamohanan; B. P., Asalatha
    Abstract: The concept of women empowerment was the outcome of several important critiques and debates generated by the women’s movement throughout the world, and particularly in the developing countries. In essence, the 1980s saw the rise of stringent feminist critiques of development strategies and grassroots interventions: mainly for these strategies having generally failed to make any significant dent in the status of women. The failure was ascribed to the adaptation and the application of such approaches as welfare, anti¬poverty, and to some extent the efficiency approach. Presently, the users of the term ‘empowerment’ tend to assume an understanding of the meaning within some particular context. Often no clear explanation of empowerment is given. We believe that some of the confusion arises because the root concept – power –itself is disputed, and so is understood and experienced in different ways by different people. In fact, the underlying assumption of many interest groups or institutions (such as the World Bank and the UN) unfortunately is that economic empowerment automatically converts to women’s empowerment. As the following epistemic quest of empowerment unfolds in six sections, the major issue reflected upon is the concept of empowerment in its importance to women’s development. We begin in the next section by exploring the definitions of empowerment and then dissects the concept of power in section 3: the concept is discussed in the subsequent sections from different perspectives of power, feminism and personal autonomy and agency in the family framework. We consider three approaches here: theory of human needs, self-determination theory and capability approach. The last section concludes the paper.
    Keywords: Women empowerment; power; autonomy; agency; capability
    JEL: I30 B54 J16
    Date: 2012–09–11
  9. By: John B. Taylor
    Abstract: Research in the early 1980s found that the gains from international coordination of monetary policy were quantitatively small compared to simply getting domestic policy right. That prediction turned out to be a pretty good description of monetary policy in the 1980s, 1990s, and until recently. Because this balanced international picture has largely disappeared, the 1980s view about monetary policy coordination needs to be reexamined. The source of the problem is not that the models or the theory are wrong. Rather there was a deviation from the rule-like monetary policies that worked well in the 1980s and 1990s, and this deviation helped break down the international monetary balance. There were similar deviations at many central banks, an apparent spillover culminating in a global great deviation. The purpose of this paper is to examine the possible causes and consequences of these spillovers, and to show that uncoordinated responses of central banks to the deviations can create an amplification mechanism which might be overcome by some form of policy coordination.
    JEL: E5 E58 F3
    Date: 2013–01
  10. By: Garcia-Martinez, Jose A.
    Abstract: We show that the observation by a principal of the effectiveness of an expert‘s action could induce the expert to lie, damaging the principal. A career-minded expert receives a private-informative signal about the real state of the world, and then he takes an action that can match or not the real state. If a principal observes the consequences of this expert’s action, i.e., if the action matches or not the real state, this expert could disregard his valuable information damaging the principal: the expert plays the opposite action to that recommended by his signal and consequently decreases the probability of matching the real state. However, this expert could play the "recommended" action with positive probability if consequences are not observed. The previous literature has found that "transparency of consequence" can only improves the incentives of the expert to reveal his valuable information. The paradoxical behavior we have found can appear when the expert needs to signal with one action two different kinds of information, and there is a particular "trade-off" in the way of signaling; this "trade-off" can be affected in an unexpected way by the observation of the expert’s action consequences. In this paper, we present a simple model to capture this idea, and characterize the range of the parameters where that occurs.
    Keywords: Transparency; Principal-Agent; Reputation
    JEL: D82 C72
    Date: 2013–01–15
  11. By: Gianandrea Staffiero (Universitat Pompeu Fabra, Department of Economics and Business); Filippos Exadaktylos (BELIS, Murat Sertel Center for Advanced Economic Studies, Istanbul Bilgi University); Antonio M. Espín (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: The rejection of unfair proposals in ultimatum games is often quoted as evidence of other-regarding preferences. In this paper we focus on those responders who accept any proposals, setting the minimum acceptable offer (MAO) at zero. While this behavior could result from the randomization between the two payoff-maximizing strategies (i.e. setting MAO at zero or at the smallest positive amount), it also implies that the opponent’s payoff is maximized and the “pie” remains intact. We match subjects’ behavior as ultimatum responders with their choices in the dictator game, in two large-scale experiments. We find that those who set MAO at zero are the most generous dictators. Moreover, they differ substantially from responders whose MAO is the smallest positive offer, who are the greediest dictators. Thus, an interpretation of zero MAOs in terms of selfish, payoff-maximizing behavior could be misleading. Our evidence indicates that the restraint from punishing others can be driven by altruism and by the desire to maximize social welfare.
    Keywords: ultimatum game, dictator game, altruism, social welfare, costly punishment, selfishness, social preferences.
    Date: 2013–01–01
  12. By: Gil S. Epstein (Bar-Ilan University); Yosef Mealem
    Abstract: This article considers an asymmetric contest with incomplete information. There are two types of players: informed and uninformed. Each player has a different ability to translate effort into performance in terms of the contest success function. While one player's type is known to both players, the other is private information and known only to the player himself. We compare the Bayesian Nash equilibrium outcome of a one-sided private information contest to the Nash equilibrium with no private information, in which both players know the type of the other player. We show conditions under which uncertainty increases the investment of the uninformed player and the rent dissipation of the contest, while decreasing the expected net payoff of the informed player. In addition, we consider conditions under which the informed player – before knowing his own type – prefers that the uninformed player knows his type. Moreover, we show conditions for the existence/non-existence of equilibrium in a two-stage contest in which the informed player declares his type (or does not declare) in the first stage and in the second stage the two players play according to the information available to them.
    Keywords: Asymmetric contests, rent seeking, incomplete information
    JEL: D72 C72
    Date: 2013–01
  13. By: Apostolos Serletis (University of Calgary); Periklis Gogas
    Abstract: King, Plosser, Stock, and Watson (1991) evaluate the empirical relevance of a class of real business cycle models with permanent productivity shocks by analyzing the stochastic trend properties of postwar U.S. macroeconomic data. They fiÂ…nd a common stochastic trend in a three variable system that includes output, consumption, and investment, but the explanatory power of the common trend drops signiÂ…ficantly when they add money balances and the nominal interest rate. In this paper we revisit the cointegration tests in the spirit of King et al. (1991), using improved monetary aggregates whose construction has been stimulated by the Barnett critique. We show that previous rejections of the balanced-growth hypothesis and classical money demand functions can be attributed to mis-measurement of the monetary aggregate.
    Date: 2013–01–21
  14. By: Erik S. Reinert
    Abstract: The idea of economic decline has been with us for a very long time. The notion that human societies are bound to follow the cyclical patterns of nature . birth, life, decline and death . is found from the Greek philosophy of Plato to the Arab philosophy of Ibn-Khaldun. Only late Renaissance and Enlightenment Entzauberung. demystification . of the world picture view freed mankind from the cyclical vicissitudes of the blindfolded god-dess Fortuna and opened up for rational economic policy to prevent booms and bust.
    Date: 2013–01
  15. By: Selcuk, O.; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper introduces a new solution concept for cooperative games with general coalitional structure in which only certain sets of players, including the set of all players, are able to form feasible coalitions. The solution concept takes into account the marginal contribution of players. This marginal contribution can be a joint contribution of several players and is equally divided among those players. Any set system representing a coalitional structure induces a collection of coalitional trees, whose nodes may consist of subsets of players. As solution we take the average of the marginal contribution vectors that correspond to all coalitional trees. The solution is ecient and several other properties are studied and some special cases are considered.
    Keywords: TU game;cooperation structure;marginal contribution;set system;Shapley value
    JEL: C71
    Date: 2013
  16. By: Brishti Guha (Singapore Management University, School of Economics)
    Abstract: I unify the following (1) men face paternal uncertainty while women do not face maternal uncertainty, (2) putative fathers and paternal kin care about true paternity, (3) paternity confidence is systematically lower in matrilocal cultures than in patrilocal ones, (4) inheritance tends to be patrilineal in high paternity confidence cultures and matrilineal in low confidence ones, and (5) most societies with patrilineal inheritance were patrilocal while most societies with matrilineal inheritance were matrilocal. I model the co-evolution of inheritance patterns and post-marital residence patterns - and their relationship with paternity uncertainty. Using a game theoretic model, I examine how a "high paternity confidence" patrilocal-patrilineal equilibrium and a "low paternity confidence" matrilineal-matrilocal equilibrium could emerge. The endogenous choice of the old to monitor the sexual behavior of the young women who reside with them, thereby affecting the paternity confidence of the young women's husbands and hence their productive incentives, is crucial.
    Keywords: Uncertain paternity; grandparents; incentives; patrilocality; inheritance; monitoring
    Date: 2012–12
  17. By: Di Bartolomeo Giovanni; Papa Stefano
    Abstract: Our paper aims to investigate conditional and unconditional motivations in investment games by using a counterfactual methodology and attitudinal survey and self-reported information about participants’ behavior. We have combined different methodologies to verify the coherence between participants’ actions, beliefs and perceptions
    Keywords: Conditional and unconditional other-regarding preferences, triadic approach, investment game, frame effect
    JEL: D03 C91 D83
    Date: 2013–01
  18. By: Brink, R. van den; Herings, P.J.J.; Laan, G. van der; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: In the literature various models of games with restricted cooperation can be found. In those models, instead of allowing for all subsets of the set of players to form, it is assumed that the set of feasible coalitions is a proper subset of the power set of the set of players. In this paper we consider such sets of feasible coalitions that follow from a permission structure on the set of players, in which players need permission to cooperate with other players. We assume the permission structure to be an oriented tree. This means that there is one player at the top of the permission structure and for every other player there is a unique directed path from the top player to this player. We introduce a new solution for these games based on the idea of the Average Tree value for cycle-free communication graph games. We provide two axiomatizations for this new value and compare it with the conjunctive permission value.
    Keywords: TU game;restricted cooperation;permission structure;Shapley value;Average Tree value;axiomatization.
    JEL: C71
    Date: 2013
  19. By: Rodica Branzei; Marco Dall'Aglio; Stef H. Tijs
    Abstract: Interval bankruptcy problems arise in situations where an estate has to be liquidated among a fixed number of creditors and uncertainty about the amounts of the claims is modeled by intervals. We extend in the interval setting the classical results by Curiel, Maschler and Tijs (1987) that characterize division rules which correspond to solutions of the cooperative bankruptcy game. Finally, we analyze the difficulties with incorporating the uncertainty about the estate.
    Date: 2013–01
  20. By: Sebastiano Fadda
    Abstract: With globalization nation States have become unable to provide effective governance of economic activity; two problems arise: the inefficiency and ineffectiveness of international regulation bodies, and their compatibility with the sovereignty of individual nation States. Both formal and informal supra-national institutions appear to lack two fundamental features of democracy: participation of people and accountability of policy makers. The measures taken by the EU to cope with the crisis, areinadequate owning to some wrong views about the working of the economy and to the lack of proper European economic governance, the decisions being dependent either on the interests of some most influential member States or on the financial establishment. In fact the European monetary Union is an hybrid: not a federal State and not an international organization of States. It’s doubtful whether Europe is converging towards a federal State and whether this be at all possible at the present time.
    Keywords: Global economic governance, European governance and democracy, Europea economic crisis, globalization and democracy
    JEL: F55 H77 O52
    Date: 2013–01
  21. By: Vidal-Puga, Juan
    Abstract: In bargaining problems, a rule satisfies ordinal invariance if it does not depend on order-preserving transformations of the agents' utilities. In this paper, a simple non-cooperative game for three agents, based on bilateral offers, is presented. The ordinal Shapley rule arises in subgame perfect equilibrium as the agents have more time to reach an agreement.
    Keywords: ordinal bargaining; ordinal Shapley rule
    JEL: C78 C72
    Date: 2013–01–14
  22. By: Kodila-Tedika, Oasis
    Abstract: This article aims to highlight the first work of economist Nathan Nunn on slavery and colonization. Indeed, for the latter, these two historical facts, quantifiable consequences, have defined the path of economic development of African countries. Secondly, this paper discusses the findings of Nunn with the prism of literature ad hoc and do not miss to criticize. Cet article a pour objectif de mettre en évidence en premier lieu les travaux de l’économiste Nathan Nunn sur l’esclavagisme et la colonisation. En effet, pour celui-ci, ces deux faits historiques, aux conséquences quantifiables, ont défini la trajectoire du développement économique des pays africains. En second lieu, cet article discute les conclusions de Nunn avec le prisme de la littérature ad hoc et ne manque pas de les critiquer.
    Keywords: institutions; esclavagisme; colonisation; Afrique; Nathan Nunn
    JEL: O11 O55 O43 P51 P14 N17
    Date: 2013–01–12
  23. By: Santos, Miguel
    Abstract: The scientific practice, in the several social sciences, cannot be implemented without the researcher clearly defines in depth the theoretical and meta-theoretical foundations that underpinning the research. Similarly, the unambiguous understanding of the concepts, in view of the multi-conceptualizations core, allows providing the accuracy and strength of research methods and conclusions. This paper seeks to clarify some concepts whose relevance in research processes becomes critical in building added value to research results.
    Keywords: research; social sciences; theory; concepts
    JEL: Y8 Z1 O32 C8
    Date: 2013
  24. By: Keller, Godfrey; Rady, Sven
    Abstract: We study a continuous-time game of strategic experimentation in which the players try to assess the failure rate of some new equipment or technology. Breakdowns occur at the jump times of a Poisson process whose unknown intensity is either high or low. In marked contrast to existing models, we find that the cooperative value function does not exhibit smooth pasting at the efficient cut-off belief. This finding extends to the boundaries between continuation and stopping regions in Markov perfect equilibria. We characterize the unique symmetric equilibrium, construct a class of asymmetric equilibria, and elucidate the impact of bad versus good Poisson news on equilibrium outcomes.
    Keywords: Strategic Experimentation; Two-Armed Bandit; Bayesian Learning; Poisson Process; Piecewise Deterministic Process; Markov Perfect Equilibrium; Differential-Difference Equation; Smooth Pasting; Continuous Pasting
    JEL: C73 D83 O32
    Date: 2012–12
  25. By: F. Javier Martinez de Albeniz; Carles Rafels; Neus Ybern (Universitat de Barcelona)
    Abstract: We provide explicit formulas for the nucleolus of an arbitrary assignment game with two buyers and two sellers. Five different cases are analyzed depending on the entries of the assignment matrix. We extend the results to the case of 2 m or m 2 assignment games.
    Keywords: core, nucleolus, assignment game
    JEL: C71
    Date: 2013
  26. By: Bas ter Weel; Semih Akcomak; Dinand Webbink
    Abstract: In many Dutch cities there are Geert Groote schools. This is no coincidence, because Geert Groote's (1340-1384) ideas form the foundation of modern education in the Netherlands and many other countries. Much less known is that his investments, and those of his followers, have put the Netherlands on the pathway towards the Golden Age. In this study, we describe the mechanism by which the influence of Groote so impressive. Furthermore, we present econometric estimates that indicate a long-lasting legacy. This research provides an explanation for high literacy, economic growth and societal developments in the Netherlands in the period before the Dutch Republic. We establish a link between the Brethren of the Common Life (BCL), a religious community founded by Geert Groote in the city of Deventer in the late fourteenth century, and the early development of the Netherlands. The BCL stimulated human capital accumulation by educating Dutch citizens without inducing animosity from the dominant Roman Catholic Church or other political rulers. Human capital had an impact on the structure of economic development in the period immediately after 1400. The educated workforce put pressure on the Habsburg monarchy leading to economic and religious resentment and eventually to the Revolt in 1572. The analyses show that the BCL contributed to the high rates of literacy in the Netherlands. In addition, there are positive effects of the BCL on book production and on city growth in the fifteenth and sixteenth century. Finally, we find that cities with BCL-roots were more likely to join the Dutch Revolt. These findings are supported by regressions that use distance to Deventer as an instrument for the presence of BCL. The results are robust to a number of alternative explanations. <em>The statistical programme used for the regression analysis and the data used for this research can also be downloaded below (attachment, if necessary rename the file as a .zip).</em>
    JEL: N33 N93 O15 J20
    Date: 2013–01

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