Findings

Something from nothing

Kevin Lewis

October 11, 2018

Does Democracy Enhance Health? New Empirical Evidence 1900–2012
Yi-ting Wang, Valeriya Mechkova & Frida Andersson
Political Research Quarterly, forthcoming

Abstract:

This study tests the relationship between democracy and population health. Some studies argue that democracies are more likely than authoritarian regimes to provide public goods and, thus, enhance health. However, recent research has challenged this argument and identified good governance as the crucial determinant of human development. Using a newly collected dataset covering 173 countries from 1900 to 2012, our analyses show that across models with various specifications, democratic elections have consistent effects on health outcomes even when other important factors, including good governance, are taken into account. There are some nuances in this relationship. First, the impact of electoral democracy tends to persist over time. Furthermore, the positive effects are particularly salient once the quality of elections has achieved a certain threshold. Our results also suggest that previous studies yielded mixed results in part because the commonly used governance indicators are only available for relatively short time periods, and the sample does not reflect the entire range of variation in measures of both democracy and governance.


Who Benefited from Women's Suffrage?
Esra Kose, Elira Kuka & Na'ama Shenhav
NBER Working Paper, August 2018

Abstract:

While a growing literature has shown that women prefer investments in child welfare and increased redistribution, little is known about the long-term effect of empowering women. Exploiting plausibly exogenous variation in U.S. suffrage laws, we show that children from economically disadvantaged backgrounds who were exposed to women’s political empowerment during childhood experienced large increases in educational attainment, especially blacks and Southern whites. We also find improvements in earnings among whites and blacks that experienced educational gains. We employ newly digitized data to map these long-term effects to contemporaneous increases in local education spending and childhood health, showing that educational gains were linked to improvements in the policy environment.


Inequality and economic growth: The role of initial income
Markus Brueckner & Daniel Lederman
Journal of Economic Growth, September 2018, Pages 341–366

Abstract:

We estimate a panel model where the relationship between inequality and GDP per capita growth depends on countries’ initial incomes. Estimates of the model show that the relationship between inequality and GDP per capita growth is significantly decreasing in countries’ initial incomes. Results from instrumental variables regressions show that in Low Income Countries transitional growth is boosted by greater income inequality. In High Income Countries inequality has a significant negative effect on transitional growth. For the median country in the world, that in the year 2015 had a PPP GDP per capita of around 10000USD, IV estimates predict that a 1 percentage point increase in the Gini coefficient decreases GDP per capita growth over a 5-year period by over 1 percentage point; the long-run effect on the level of GDP per capita is around − 5%.


The heritability of fertility makes world population stabilization unlikely in the foreseeable future
Jason Collins & Lionel Page
Evolution and Human Behavior, forthcoming

Abstract:

The forecasting of the future growth of world population is of critical importance to anticipate and address a wide range of global challenges. The United Nations produces forecasts of fertility and world population every two years. As part of these forecasts, they model fertility levels in post-demographic transition countries as tending toward a long-term mean, leading to forecasts of flat or declining population in these countries. We substitute this assumption of constant long-term fertility with a dynamic model, theoretically founded in evolutionary biology, with heritable fertility. Rather than stabilizing around a long-term level for post-demographic transition countries, fertility tends to increase as children from larger families represent a larger share of the population and partly share their parents' trait of having more offspring. Our results suggest that world population will grow larger in the future than currently anticipated.


The Interaction of Communities, Religion, Governments, and Corruption in the Enforcement of Contracts and Social Norms
Matthew Jackson & Yiqing Xing
Stanford Working Paper, September 2018

Abstract:

We investigate the complementarity between informal communities and formal government policing in enforcing norms of reciprocation and exchange. We observe that, in a cross-country analysis, GDP is positively correlated with a measure of confidence in reliance on others within a community, and with the interaction of the that measure and a measure of Rule of Law - suggesting that informal community enforcement and formal policing can be complements. We introduce a model in which people exchange informally within their community as well as externally on a market in which transactions are policed. We show that informal community enforcement and formal policing are complements: the news that someone was caught by the police leads that person to be ostracized by their community, bolstering incentives. Although transactions within a community can be less directly beneficial than those on a wider market, doing some transactions within a community and others on a formal market lowers overall costs of enforcement and is still welfare-enhancing compared to either extreme for a wide range of costs of policing. We also show that religion can enhance the complementarity between community and formal policing, while corruption undermines it.


Estimating the health and socioeconomic effects of cousin marriage in South Asia
Mushfiq Mobarak et al.
Journal of Biosocial Science, forthcoming

Abstract:

The effects of marriage between biological relatives on the incidence of childhood genetic illness and mortality are of major policy significance, as rates of consanguinity exceed 50% in various countries. Empirical research on this question is complicated by the fact that consanguinity is often correlated with poverty and other unobserved characteristics of households, which may have independent effects on mortality. This study has developed an instrumental variables empirical strategy to re-examine this question, based on the concept that the availability of unmarried cousins of the opposite gender at the time of marriage creates quasi-random variation in the propensity to marry consanguineously. Using primary data collected in Bangladesh in 2006–07 and Pakistan in 2009–10, the study found that previous estimates of the impact of consanguinity on child health were biased and falsely precise. The study also empirically investigated the social and economic causes of consanguinity (including marital quality) and concludes that marrying a cousin can have positive economic effects for one’s natal family, by allowing deferral of dowry payments until after marriage.


Geopolitics and Asia’s little divergence: State building in China and Japan after 1850
Mark Koyama, Chiaki Moriguchi & Tuan-Hwee Sng
Journal of Economic Behavior & Organization, forthcoming

Abstract:

We provide a new framework to account for the diverging paths of political development in China and Japan during the late nineteenth century. The arrival of Western powers not only brought opportunities to adopt new technologies, but also fundamentally threatened the sovereignty of both countries. These threats and opportunities produce an unambiguous impetus toward centralization and modernization for small states, but place conflicting demands on larger states. We use our theory to study why China, which had been centralized for much of its history, experienced gradual disintegration upon the Western arrival, and how Japan rapidly unified and modernized.


Natural resources and infectious diseases: The case of malaria, 2000–2014
Wen-Yang Chang & Dan Wei
Social Science Journal, forthcoming

Abstract:

Recent discussions on the natural resource curse theory have expanded from looking at economic and sociopolitical developments to focusing on the impact of natural resources on the spread of, and deaths from, infectious diseases. However, consensus on a link between natural resources and infectious diseases rarely exists, and empirical results are mixed at best. This paper attempts to re-explore such a link by focusing on malaria, a major infectious disease. We argue that in resource-rich countries the reluctance of governments to invest in human capital, rampant corruption and weakened state capacity, and inferior hygiene conditions in mining and drilling areas lead to higher numbers of cases of malaria. To provide empirical support, we apply different natural resource measures, and examine their impacts on the number of cases of infection and death from malaria for the period 2000–2014. Statistical results largely confirm our observations that natural resource abundance is positively associated with a higher number of incidences of and deaths from malaria. These results hold with alternative malaria and resource indicators, and model specifications. The results also have policy implications for malaria control, global public health, and natural resource management.


Labor scarcity, land tenure, and historical legacy: Evidence from Mexico
Emily Sellars & Jennifer Alix-Garcia
Journal of Development Economics, November 2018, Pages 504-516

Abstract:

How does labor scarcity shape institutional development? We examine the long-term impact of Mexico's 16th-century demographic collapse on landholding patterns through the present day. We show that the collapse, which reduced the indigenous population by between 70 and 90 percent and differed in severity across space, facilitated land concentration and the rise of a landowner class that dominated Mexican political economy for centuries. To identify the impact of the population collapse on land arrangements we use an instrumental-variables identification strategy exploiting climatic shocks associated with an epidemic in the 1570s that roughly halved the indigenous population. Though landholding patterns were transformed following the Revolution of 1910, we also show that disease-impacted areas now have more land in common-property institutions with limited property rights. The population collapse thus had a persistent impact on Mexican political economy, but the nature of this impact has changed radically over time.


Structural Change and Economic Growth in the British Economy before the Industrial Revolution, 1500–1800
Patrick Wallis, Justin Colson & David Chilosi
Journal of Economic History, September 2018, Pages 862-903

Abstract:

Structural transformation is a key indicator of economic development. We present the first time series of male labor sectoral shares for England and Wales before 1800, using a large sample of probate and apprenticeship data to produce national- and county-level estimates. England experienced a rapid decline in the share of workers in agriculture between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw few changes. Our results show that England experienced unusually early structural change and highlight the mid-seventeenth century as a turning point.


Transportation and Health in a Developing Country: The United States, 1820-1847
Ariell Zimran
NBER Working Paper, August 2018

Abstract:

I study the impact of transportation on health in the rural US, 1820–1847. Measuring health by average stature and using within-county panel analysis and a straight-line instrument, I find that greater transportation linkage, as measured by market access, in a cohort's county-year of birth had an adverse impact on its health. A one-standard deviation increase in market access reduced average stature by 0.10 to 0.29 inches. These results explain 26 to 65 percent of the decline in average stature in the study period. I find evidence that transportation affected health by increasing population density, leading to a worse epidemiological environment.


Rethinking the Political Economy of Decentralization: How Elections and Parties Shape the Provision of Local Public Goods
Raúl Ponce-Rodríguez et al.
Publius: The Journal of Federalism, Fall 2018, Pages 523–558

Abstract:

As more and more of the world’s states devolve power and resources to sub-national governments, decentralization has emerged as one of the most important global trends of the new century. Yet, there is still no consensus as to the benefits of decentralization and how to design institutions that can realize these benefits. We investigate the political conditions under which the decentralization of authority will improve the delivery of public goods. Building off Oates’ “decentralization theorem” to include inter-jurisdictional spillovers, we develop a new theory suggesting that the interaction of democratic decentralization (the popular election of sub-national governments) and party centralization (the power of national party leaders over sub-national office-seekers) will produce the best service delivery outcomes. To test this argument empirically, we develop a new dataset of sub-national political institutions. Our analyses, which examine educational and health service delivery in 135 countries across thirty years, provide support for our theoretical expectations.


China, Europe, and the Great Divergence: A Study in Historical National Accounting, 980–1850
Stephen Broadberry, Hanhui Guan & David Daokui Li
Journal of Economic History, forthcoming

Abstract:

As a result of recent advances in historical national accounting, estimates of GDP per capita are now available for a number of European economies back to the medieval period, including Britain, the Netherlands, Italy, and Spain. The approach has also been extended to Asian economies, including India and Japan. So far, however, China, which has been at the center of the Great Divergence debate, has been absent from this approach. This article adds China to the picture, showing that the Great Divergence began earlier than originally suggested by the California School, but later than implied by older Eurocentric writers.


Wealth and health revisited: Economic growth and wellbeing in developing countries, 1970 to 2015
Wade Cole
Social Science Research, forthcoming

Abstract:

Is wealthier always healthier, or are the health effects of economic growth trivial, irregular, or perhaps even detrimental? Using data for up to 134 developing countries between 1970 and 2015, this article revisits the effect of economic growth on health, focusing on infant mortality, life expectancy, and caloric consumption. The analysis enlarges the geographical and temporal scope of previous samples and attempts to isolate the causal effects of growth using two-stage models with instrumental variables. Results show that five-year economic growth rates improve all three health outcomes, even after controlling for other important determinants and accounting for the possibility of reverse causality. Growth effects are largest for infant mortality rates. Nevertheless, there are diminishing returns to economic growth as a function of economic development: as countries become more affluent, the benefits of growth for health diminish.


FinTech in Sub-Saharan Africa: What Has Worked Well, and What Hasn't
David Yermack
NBER Working Paper, September 2018

Abstract:

The FinTech sector has begun to grow rapidly in sub-Saharan Africa. I document far greater adoption of social media, digital currency, ride sharing, and other FinTech applications in countries with a common law legal heritage compared to those with a civil law system, suggesting that legal origin plays a critical role in setting the stage for growth through entrepreneurship in the developing world. The electrical, telecom, and Internet infrastructure required for FinTech has been built out more extensively in common law countries. Financial inclusion outcomes are also better in emerging markets that have a common law heritage.


Is living in African cities expensive?
Shohei Nakamura et al.
Applied Economics Letters, forthcoming

Abstract:

Although several studies have examined why overall price levels are higher in richer countries, little is known about whether there is a similar relationship at the urban and city level across countries. This paper compares the price levels of cities in Sub-Saharan Africa with those of other regions by analyzing price information collected for the purpose of calculating official purchasing power parities. The approach of the paper is to readjust the calculated price levels from national to urban levels, using known price-level ratios between those areas. The results indicate that African cities are relatively more expensive, despite having lower income levels. The price levels of goods and services consumed by households are 25 to 28 percent higher in Sub-Saharan Africa than in other low- and middle-income countries, relative to their income levels. Such high costs of living could constrain livelihood of low-income urban residents, as well as the development of Africa’s urban economies.


Networks, Institutions, and Uncertainty: Information Exchange in Early-Modern Markets
Emily Erikson & Sampsa Samila
Journal of Economic History, forthcoming

Abstract:

We analyze patterns of informal information exchange by the English East India Company’s captains to assess the role of relational and institutional governance systems and uncertainty in encouraging information exchange. Using archival data from the emerging early-modern global trade network, we show that uncertainty drove information exchange. Relational-based contract enforcement mechanisms such as small group exchange were largely absent, and increasing institutional strength was associated with decreasing rates of information exchange. The results suggest that opportunity and demand were more important determinants of information exchange than the emergence of formal and informal governance systems.


The Economic Impact of Universities: Evidence from Across the Globe
Anna Valero & John Van Reenen
Economics of Education Review, forthcoming

Abstract:

We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that a 10% increase in a region's number of universities per capita is associated with 0.4% higher future GDP per capita in that region. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between GDP per capital and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased supply of human capital and greater innovation. Furthermore, we find that within countries, higher historical university presence is associated with stronger pro-democratic attitudes.


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