Decades to Develop
The Great Revenue Divergence
Alexander Lee & Jack Paine
International Organization, forthcoming
This article describes and explains a previously overlooked empirical pattern in state revenue collection. As late as 1913, central governments in the West collected similar levels of per capita revenue as the rest of the world, despite ruling richer societies and experiencing a long history of fiscal innovation. Western revenue levels permanently diverged only in the following half-century. We identify the twentieth-century great revenue divergence by constructing a new panel data set of central government revenue with broad spatial and temporal coverage. To explain the pattern, we argue that sustainably high levels of revenue extraction require societal demand for an activist state, and a supply of effective bureaucratic institutions. Neither factor in isolation is sufficient. We formalize this insight in a game-theoretic model. The government can choose among low-effort, legibility-intensive, and crony-favoring strategies for raising revenues. Empirically, our theory accounts for low revenue intake in periods of low demand (the nineteenth-century West) or low bureaucratic capacity (twentieth-century former colonies), and for eventual revenue spikes in the West.
Kin-based institutions and economic development
Duman Bahrami-Rad et al.
Harvard Working Paper, August 2022
Though many theories have been advanced to account for global differences in economic prosperity, little attention has been paid to the oldest and most fundamental of human institutions: kin-based institutions -- the set of social norms governing descent, marriage, clan membership, post-marital residence and family organization. Here, focusing on an anthropologically well established dimension of kinship, we establish a robust and economically significant negative association between the tightness and breadth of kin-based institutions -- their kinship intensity -- and economic development. To measure kinship intensity and economic development, we deploy both quantified ethnographic observations on kinship and genotypic measures (which proxy endogamous marriage patterns) with data on satellite nighttime luminosity and regional GDP. Our results are robust to controlling for a suite of geographic and cultural variables and hold across countries, within countries at both the regional and ethnolinguistic levels, and within countries in a spatial regression discontinuity analysis. Considering potential mechanisms, we discuss evidence consistent with kinship intensity indirectly impacting economic development via its effects on the division of labor, cultural psychology, institutions, and innovation.
Democracy, Labor's Share of Income, and Labor Supply: A Time-Series Cross-Sectional Analysis
Political Research Quarterly, forthcoming
This paper examines democracy's impact on the labor share of income: the share of Gross Domestic Product (GDP) dedicated to wages, salaries, and benefits. I hypothesize democratic regimes afford labor the opportunity to increase its share of national income. While previous empirical work finds cross-sectional evidence for the hypothesis, this paper employs a time-series cross-sectional analysis using data for 119 countries between 1950 and 2017, indicating the labor share of income is higher in democratic countries. The estimates are robust to different specifications of the statistical model. This paper also examines a potential causal mechanism that links democracy to a higher labor share through the supply of labor (the average number of hours worked in the economy). The relationship between democracy and the supply of labor lends additional evidence to my hypothesis. In a world characterized by diverging democracy, the results imply the path countries choose between democracy and dictatorship matters.
Foundations of a New Democracy: Schooling, Inequality, and Voting in the Early Republic
Tine Paulsen, Kenneth Scheve & David Stasavage
American Political Science Review, forthcoming
Democratic theorists have long argued that states can create more resilient democracies through education. Educational investments are thought to produce more economic equality and instill in citizens greater capacity and responsibility to participate in politics. Using a geographic regression discontinuity design and township-level data from Antebellum New York State, we examine whether state funding for common schools led to higher voter turnout as well as higher earnings and lower inequality. Our estimates support the view that a participatory democratic culture emerged not only because of initial favorable endowments but also because of subsequent government decisions to fund education. New York townships that received more school funding later had higher median earnings, lower earnings inequality, and higher levels of voter turnout. Our findings support the view that maintaining democracy requires active investments by the state, something that has important implications for other places and other times - including today.
The multigenerational impacts of educational expansion: Evidence from Vietnam
Thomas Cornelissen & Thang Dang
Labour Economics, forthcoming
We investigate the multigenerational effects of a primary school expansion program in Vietnam. In the directly affected generation, the expansion increases educational attainment, literacy, non-agricultural economic activity, earnings and the intergenerational educational mobility. It increases human capital investments in the children of the directly affected generation, with increased educational expenditures, school enrollment, and health investments, and a reduction in child labor. Moreover, the expansion improves health in old age of the parents of the directly affected generation, an effect that seems to operate through increased financial resources, access to private health insurance and reduced alcohol consumption.
The Slaughter of the Bison and Reversal of Fortunes on the Great Plains
Donna Feir, Rob Gillezeau & Maggie Jones
NBER Working Paper, August 2022
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 percent 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.
The Institutional Legacy of the Mexican Rancho System in California
Dean Lueck & Julio Alberto Ramos Pastrana
Indiana University Working Paper, June 2022
We analyze the effect of the inherited Mexican property institutions in California on the state's early agricultural development, focusing on land demarcation and the implied water rights. In California large tracts of land, called ranchos, granted during Spanish and Mexican rule of California persisted once the region became part of the US and became intertwined with the American system of rectangular demarcation. We exploit this natural experiment in property institutions and use farm and county-level data to examine the effects of the Rancho System on farms' shapes, and values. We document large losses in land values from the Rancho System and provide evidence that the mechanisms driving these differences in farms' values are differences in farms' shape and the development of irrigation.
The Sailing Scribes: Circulating Law in the Twentieth-Century Indian Ocean
Fahad Ahmad Bishara
Law and History Review, forthcoming
What did the practice of law look like on the high seas? This has been a matter of some discussion among legal historians, with the bulk of the evidence coming from encounters between European ships in the Atlantic and Asia. This article takes a different tack, taking as its starting point a series of contracts copied into the logbook of the early-twentieth century Arab dhow captain (nakhoda) 'Abdulmajeed Al-Failakawi. Although some of these appear to have been contracts that the nakhoda entered into or witnessed, most were contractual templates that presented formulas for a variety of written obligations between members of the Indian Ocean maritime community. In reading these formulas alongside contracts left behind by Al-Failakawi and other Indian Ocean nakhodas, I reflect on how law circulated by members of an itinerant society of mariners that sought to forge the contours of a commercial world on their ships and across the waters, and weave it through an imperial seascape. I explore how workaday forms of law and legal epistemologies circulated around the maritime marketplaces of the Indian Ocean world, at the margins of a colonial and imperial political economy, through actors who read across different genres of literature, and who moved between the multiple roles of captain, navigator, supercargo, and scribe.