Schedule
Detailed Schedule
FRIDAY, SEPTEMBER 15
Workshops & Local Tours, 9:00-12:00 p.m.
Session 1: Friday 1:30 p.m.
A: AGRICULTURE ON THE AMERICAN FRONTIER
- Irrigation Institutions in the American West
- Stephen N. Bretsen, Wheaton College
- Peter J. Hill, Wheaton College
Abstract: In this paper we analyze the evolution of irrigation institutions in the West. We look at the contractual arrangements used in private irrigation efforts, the efficacy of the irrigation districts in the various western states, and after 1902, the success (and failure) of Bureau of Reclamation projects. We compare the different legal frameworks in the western states and their influence on the form of irrigation contracts and irrigation firms. We also examine the financing and organizational structure of small scale government projects and contrast that with the financing and governance mechanisms used by the Bureau of Reclamation.
- Squatters, Production, and Violence
- Karen Clay, Carnegie Mellon University
Abstract: This paper uses a model and historical data from California in 1860, a time at which property rights were uncertain, to investigate the links among property rights, production, and violence. Consistent with the model, squatters had production that was 15-47 percent lower than non squatters; a 10 percent increase in the density of squatters was associated with an 8-17 percent decrease in agricultural output per acre, and at levels above the mean increased density of squatters was associated with higher levels of violence. We show that the negative effect of squatters is not unique to California. Most of the states west of the Mississippi in 1860 had effects of similar magnitude. The results on production and violence have implications for understanding the historical development of agriculture in the United States, since squatting on agricultural land was prevalent throughout the United States, and for understanding agriculture in the Third World today.
- Ecological Frontiers on the Grasslands of Kansas: Changes in Farm Scale and Crop Diversity
- Kenneth M. Sylvester, University of Michigan
Abstract: The environmental consequences of increasing farm scale have received growing attention in recent decades. Ecologists have cited the rise of large-scale farming and its association with monoculture as a threat to ecosystems. Historically, the roots of this relationship are often traced to the emergence of single crop production during the settlement of the North American plains, when family farms first escaped technological and geographical limits of forested and uneven terrain east of the Mississippi. Did traditions of mixed husbandry vanish when Euroamericans ventured onto the plains? Our paper explores the origins of the modern relationship between scale and diversity using a new sample of Kansas farms between 1860 and 1940. In 25 townships across the state, we demonstrate that only a few plains farms were agents of early monoculture and explore the role of scale in its emergence.
B: CREDIT, OWNERSHIP, AND FIRM PERFORMANCE
- Credit Market Constraints and Financial Networks in Late Victorian Britain
- Fabio Braggion, Tilburg University
Abstract: Economic historians have debated whether imperfections in British capital markets delayed the adoption of second industrial revolution technologies in Britain after 1870. Using a data set of over 600 British companies operating between 1895 and 1904, I test whether companies working with second industrial revolution technologies were more financially constrained than other companies. Economic performances of credit market constrained companies should heavily depend on access to informal sources of capital and close relationships with banks. Relationships with banks are proxied by geographical distance between the company and the bank. Access to informal sources of capital is measured by the number of titled people (Lords, Baronets, Knights) on the administration board of the company. My findings show that economic performances of companies operating with second industrial revolution technologies were strongly and positively affected by shorter distance to a bank and by the number of titled directors serving in their administration board.
- Cleansing Under the Quota: The Defense and Survival of Sugar Mills in 1930s Cuba
- Alan Dye, Barnard College, Columbia University
- Richard Sicotte, University of Vermont
Abstract: This paper examines the effects of the shock of the Great Depression, and the compositional effects of heterogeneous plant survival, on the industrial structure in the Cuban sugar industry. Testing for the “cleansing effect” of the Depression on technical vintages, we observe less plant closure than warranted by the demand reduction. The reason: Cuban authorities adopted a sugar quota system in 1931 that served to protect inefficient mills. The paper uses discrete and continuous duration analysis of mill-level data to test a range of hypotheses about the composition of firm characteristics of sugar production in Cuba before and during the crisis. Our findings support the general literature on firm survival but also provide new insights into the role of institutions in Cuban political economy during the Revolution of 1933 and afterward.
- Corporate Ownership and Governance in the Early Nineteenth Century (US)
- Eric Hilt, Wellesley College
Abstract: This paper analyzes the ownership structures and governance institutions of the business corporations of New York State in the 1820s. Using a new dataset collected from the returns from New York's capital tax of 1825-28, and from the charters of the corporations, I document the extent of separation of ownership from control in these enterprises, and the governance institutions associated with different ownership structures. The results indicate that incorporators in different industries chose significantly different governance institutions. Charter provisions such as shareholders’ voting rights and financial disclosure requirements varied substantially across industries, and were associated with widely different patterns of ownership. Banks and insurance corporations, for example, were governed and owned quite differently than manufacturing firms or utilities.
Plenary Session: 3:30-5:00 p.m.
SATURDAY, SEPTEMBER 16
Session 2: Saturday 8:00 a.m.
A: COLONIAL POLICIES AND LEGACIES
- Legal Origins, Colonial Origins, and Economic Growth: Evidence from a Natural Experiment (South Africa)
- Liam Brunt, University of Lausanne
Abstract: In 1795 the British took control of the Cape colony (South Africa) form the Dutch; and in 1843 they exogenously changed the legal basis of landholding, giving more secure property rights to landholders. Since endowments and other factors were held constant, these changes offer clean tests of the effects on economic growth of colonial identity and secure property rights. The effects of both changes were immediate, positive and large. Other legal and institutional changes, such as the move to a common law system in 1827, had no such effects on economic growth.
- Once Upon a Time in the Americas: Land and Immigration Policies in the New World
- Stanley L. Engerman, University of Rochester
- Kenneth L. Sokoloff, UCLA
Abstract: Our paper aims to improve our understanding of whether there are systematic patterns in the evolution of institutions by examining land and immigration policies across the colonies/societies established by Europeans in the New World over the 16th, 17th, and 18th centuries. The Americas provide an excellent natural laboratory to study the effects of different forces on the development of institutions. First, these societies were all settled by a limited set of European countries at roughly the same time and had diverse endowments. Second, although their initial conditions differed enormously in some respects, nearly all of these New World societies had an abundance of land and natural resources and specialized in agriculture and mining. The policies they adopted toward the ownership and use of land and the openness to labor flows had significant implications for their long-run paths of development.
- The Spanish Empire and its Legacy: Fiscal Re-Distribution and Political Conflict in Colonial and Post-Colonial America
- Maria Alejandra Irigoin, The College of New Jersey
- Regina Grafe, Nuffield College, Oxford
Abstract: Using the Americas as a ‘natural’ historical experiment that can shed light on factors determining long-term economic growth economic historians have suggested two explanatory paths: NIE explains Northern success and Southern failure with the institutional legacy bequeathed by Britain and Spain. In the natural endowments view resources encountered by European colonizers fostered divergent levels of equality impacting on growth. This paper challenges both views. Section 1 revises the fiscal system arguing that NIE have misinterpreted the nature of Spanish colonial rule. Section 2 uses regional fiscal accounts showing that systematic revenue re-distribution within the colonial sphere rather than endowments drove inequality. Section 3 shows how re-distributive colonial rule disintegrated as a consequence of a contingent event, the imprisonment of the Spanish king in 1808. Fiscal interdependence between regions turned into beggar-thy-neighbor strategies. We reverse the NIE causality form weak institutions causing economic failure into fiscal failure leading to political conflict.
B: BANKING AND FINANCE
- Institutional Innovation and the Creation of Liquid Financial Markets: The Case of the American Over-the-Counter Market
- J. Peter Ferderer, Macalester College
Abstract: Central banks, by acting as a lender of last resort during panics and moderating fluctuations in short-term interest rates, have the potential to dramatically alter the risk-return tradeoff facing potential market-makers, thereby influencing their willingness to supply immediacy services (liquidity) to secondary security markets. We examine whether this was the case for the United States following creation of the Federal Reserve in 1913. Did this institutional change affect liquidity provision in the over-the-counter market for bonds? To address this question, we examine the entry and exit of dealers from this market using data contained in Security Dealers of North America, a semi-annual directory of financial firms. Furthermore, we use bid and ask price data from the Commercial and Financial Chronicle to examine whether the Federal Reserve affected the evolution of liquidity in the over-the-counter market.
- Geographic and Regulatory Frontiers in Commercial Banking: Private Banking in the U.S., Scotland, and Germany in Early Industrialization
- Jane Knodell, University of Vermont
Abstract: Unincorporated, unlimited-liability banks were a significant part of the commercial banking systems of the U.S., Scotland, and Germany during these countries' early industrialization. Private banks still populated the late-nineteenth century American and German financial systems, but not the Scottish. I argue that the differential evolution of private banking in the three countries has its origins in the different decisions made by authorities during early industrialization about where to draw the regulatory frontier between incorporated and unincorporated banking. The Scottish private bankers were hampered in their long-run survival by their greater freedom at the outset: they were the only ones legally authorized to issue currency, a business that drew them into competition with much larger, incorporated banks. Private banks in the U.S. and Germany were forced to find other ways to meet the demand for money, resulting not only in their survival, but also a more flexible and adaptive financial sector.
- New Evidence on State Banking before the Civil War (US)
- Warren Weber, Federal Reserve Bank of Minneapolis
Abstract: Prior to the Civil War there were three major differences among states in how banks were regulated: (1) Where they were established by charter or under free-banking laws, (2) Whether they were permitted to branch, (3) Whether the state established a state-owned bank. I use of census of banks that existed in the United States prior to 1861 that I have recently constructed to determine how these differences in state regulation affected banking outcomes. Specifically, I determine differences in banks per capita by state; bank longevities (survival rates) by state, size, and type of regulation; and bank failure probabilities also by state, size, and type of regulation. In addition, I estimate the losses experienced by note holders and determine whether there were systematic differences depending on whether or not a bank was organized under a free banking law.
C: LABOR MARKETS IN THE UNITED STATES
- Historical Trends in Executive Compensation, 1936-2003
- Carola Frydman, MIT
- Raven Saks, Board of Governors of the Federal Reserve System
Abstract: We provide a long-term perspective to the increases in executive compensation of the past two decades by constructing a panel dataset of top executives in large firms from 1936 to the present. The average real value of total compensation experienced three phases during our sample period: a sharp decline during World War II, a modest and gradual increase from the mid-1940s to the 1970s, and a high growth rate in the 1980s and 1990s. The structure of executive pay has undergone a steady transformation over the century, as incentive pay has become a larger share of compensation over time. This trend is partly attributable to tax policy in the 1950s and 1960s, which encouraged the use of stock options as a substitute for cash remuneration. High income taxes also limited the total value of compensation during this period, preventing managerial compensation from keeping pace with the growing size of firms.
- The Returns to Education in the Early 20th Century: New Historical Evidence
- Joseph Kaboski, The Ohio State University
- Trevon D. Logan, The Ohio State University
Abstract: There is a large literature that looks at skill biased technical change, both in developed and developing countries. The emerging consensus is that returns to skill were U-shaped over the twentieth century in the United States, with high returns in the early twentieth century at the advent of the high school movement. Given less integrated labor markets and different sectoral structures in different areas of the country in the early twentieth century, there is reason to expect considerable geographic variation in returns to education in the early 20th century. We use a new data source, a report from the U.S. Commissioner of Education in 1909, to estimate the returns to skill of high school teachers in the early twentieth century. We find significant regional variation in the returns to skill, with large returns for the Midwest (7%), but significantly lower returns in the South (3%) and West (0%).
- Married Women's Property Acts and Women's Labor Force Participation in the United States, 1870-1920
- Evan Roberts, University of Minnesota
Abstract: Between 1870 and 1920 married women's rights to own and control property, and conduct businesses, separate from their husbands were extended throughout most American states. While there is substantial research on the motivations for the married women's property acts, there is no published research on how the laws affected married women’s overall labor force participation, or business proprietorship. By using variation in the timing of legal change to examine effects on labor force participation by women, we are able to estimate the magnitude of the impact of institutional change on economic behavior. I use American census data from 1870 through 1920 to estimate (1) the effect of changes in married women’s property legislation on married women’s overall labor force participation, and (2) conditional on market participation, the effect of changes in married women’s property legislation on married women’s involvement in business ownership.
Session 3: Saturday 10:15 a.m.
A: LEGAL AND INSTITUTIONAL ORIGINS
- The Private Rights of Organizations: The Tangled Roots of Laissez Faire and the Right to Privacy
- Ruth Bloch, UCLA
- Naomi Lamoreaux, UCLA
Abstract: Despite the rhetoric of the American Revolution, during the early-nineteenth-century U.S. rights devolved as a matter of practice on collectivities (families, corporations, towns, churches, voluntary associations) rather than on individuals. As collectivities assumed new quasi-governmental functions in the half century following the Revolution, they carved out spheres of autonomy within which the state was reluctant to intervene. In the process they dramatically altered the role that government played in economic and social life, giving substance to contemporary ideas of laissez faire without challenging government’s fundamental source of regulatory authority, its police powers. Although early-nineteenth-century Americans did not articulate this drive for autonomy in terms of a right to privacy, their success in carving out spheres of authority that were, except in the most extreme cases, deemed to be beyond the purview of the state laid the foundation for present-day notions of a Constitutional right to privacy.
- Organizational Support for Communal Individualism
- Douglass C. North, Washington University
- John Joseph Wallis, University of Maryland
- Barry R. Weingast, Stanford University
Abstract: Although economic theory posits a world of atomistic individuals, human societies are made up of a wide variety or more or less organized groups. The ability of individuals to participate in coordinated action is limited by the tools available to enforce the within group agreements that make collective action possible. We have argued elsewhere that a fundamental force holding early human societies together is the creation of limited access to organizational forms. Specifically, that a small number of powerful groups mutually agrees to enforce each other’s rights to valuable resources or activities. Limited access creates economic rents, and the existence of rents provides an incentive for each of the privileged groups to support the current political-economic-social regime. Modern economic growth begins only when societies open access to organizational forms. Our paper traces the specific political and economic changes that made this transition to open access possible.
- Creating an American Property Law: Alienability and its Limits in American History
- Claire Priest, Northwestern University
Abstract: This paper analyzes an issue central to the economic development of the early United States: the transformation of property law doctrine relating to the remedies available to secured and unsecured creditors. Under traditional English law, an individual’s title to land was protected from the claims of unsecured creditors, and equity courts adopted procedures making it costly for creditors to seize land that had been pledged as collateral in mortgage agreements. Although the English property laws exempting land from debts were recognized in many colonies, they were rejected by several colonies that sought to improve the terms upon which credit would be extended. In 1732, Parliament enacted The Act for the More Easy Recovery of Debts in America. This statute, and those of the colonies that voluntarily reformed their laws prior to the Act, substantially dismantled the English inheritance system by giving creditors priority to land over heirs and devisees.
B: PUBLIC GOODS
- Social Divisions and Public Goods Provision: Evidence from Colonial India
- Latika Chaudhary, Hoover Institution
Abstract: This paper explores the relationship between social divisions and the provision of local public goods by district councils in British India. I find that districts with a higher degree of social fragmentation along caste and religious lines allocated lower shares of expenditures to education and higher shares of expenditures to local roads and bridges. I interpret these results as reflecting how the effects of unequal political power among groups were more pronounced in more heterogeneous districts. Groups with greater representation on district councils were able to influence local policy and tailor the allocation of public expenditures to reflect their preferences. The results highlight the difficulties of decentralized provision of public goods in the presence of significant inequality between groups. These findings also call attention to the need to explore the role of political inequality across groups in explaining lower public investments towards quasi-public goods like education in diverse communities.
- Mothers' Pension Legislation and the Origins of Cross-State Variation in Welfare Generosity
- Carolyn Moehling, Yale University
Abstract: Between 1910 and 1920, 39 states enacted mothers’ pensions laws, establishing the first public welfare programs specifically targeted to single mothers. But while the variation in the timing of enactment was small, the variation in provisions of these laws was substantial. Eligibility requirements, maximum benefit levels, and funding provisions varied widely across the states. This variation is striking not only for its extent but also for how closely it mirrors the variation in welfare benefit levels today. Understanding the factors influencing the variation in mothers’ pensions laws, therefore, may provide some insights into why differences in welfare generosity have been so persistent. This study considers this issue first by examining the legislative history of mothers’ pension laws in a few select states and then by examining empirically how the provisions of these laws were correlated with the economic, social, and political conditions of the states in the 1910s.
- Demand for Private Health Insurance, Precautionary Savings, and Progressive Reform Failure
- John E. Murray, University of Toledo
Abstract: In Progressive era America there was no public health insurance, which may have led workers to treat private insurance and savings as substitutes. This paper provides evidence that older workers saved in precautionary fashion as a substitute for health insurance. The analysis is relatively straightforward thanks to the lack of social insurance. Effects of savings on demand for private health insurance gives a new view of the failure of Progressive reformers to implement government health insurance proposals. Progressives underestimated worker ability to save against health contingencies, which in turn led them to overestimate political feasibility of government health insurance.
C: EUROPEAN DEVELOPMENT AND DISSOLUTION
- Law and Economic Development in England: New Evidence from Acts of Parliament, 1600-1815
- Dan Bogart, University of California, Irvine
- Gary Richardson, University of California, Irvine
Abstract: How did the law affect economic development in Britain during the seventeenth and eighteenth centuries? We offer a new perspective on this question by analyzing the characteristics of all economic legislation between 1600 and 1815. Our main finding is that the eighteenth century witnessed a significant growth in legislation dealing with property rights. In particular, there was an increase in estate Acts which gave individuals the right to sell, lease, and mortgage land within their estate, enclosure Acts which eliminated common property rights in agriculture, and statutory authority Acts which created new organizations that financed infrastructure or public services by charging user-fees. Our evidence also shows that all economic legislation, especially those dealing with property rights, increased after the Glorious Revolution in 1688-89 and after 1750. The last two findings suggest that political changes and industrialization were closely related with the growth in legislation.
- Weak and Strong States: Fiscal Regimes and Sovereign Credit Risk in 18th and 19th Century Continental Europe
- Mark Dincecco, IMT Lucca Institute for Advanced Studies
Abstract: This paper examines how fiscal centralization and limited government influenced sovereign credit risk in Continental Europe during the 18th and 19th centuries. Prior to the French Revolution, many Continental states suffered from fiscal fragmentation and autocratic rule. Fiscal centralization occurred in most Continental states from 1789 to 1815, resolving the fragmentation problem. Limited government, which resolved the problem of autocratic rule, did not emerge in most Continental states until the 1830s and 1840s, however. I use a new panel data set of government bond yields to test how sovereign credit risk varied with these institutional reforms. My results suggest a non-trivial link between limited government institutions and financial property rights to public debt. In particular, I find that limited government led to significant improvements in sovereign creditworthiness, but that fiscal centralization did not. At the same time, the evidence indicates that fiscal centralization was likely a pre-condition to reduce sovereign credit risk.
- The Organization of Merchant Empires: A Case Study of Portugal and England
- Claudia Rei, Boston University
Abstract: Portugal's crown monopoly of the Indian trade lasted less than a century whereas England's chartered monopoly endured for more than two and a half centuries. If duration is understood as success, then it is important to investigate the reasons behind the choice of these different organizational forms. This paper provides a theoretical model that predicts the conditions under which a monarch chooses either to own the monopoly of trade or to charter it away, and interprets the choices made in early modern Portugal and England in light of the model.
Dissertation Session: 2:30-4:30 p.m.
Presidential Address: 5:00-6:00 p.m.
SUNDAY, SEPTEMBER 17
Session 4: Sunday 8:30 a.m.
A: SLAVERY AND ITS AFTERMATH
- Determinants of Slave Prices: Louisiana, 1725 to 1820
- Ashley Coleman, Wachovia Securities
- William K. Hutchinson, Vanderbilt University
Abstract: The institution of slavery marks the most horrific period in United States history. Slavery, being an economic system as well as a social system, has attracted the attention of economists and economic historians who have attempted to understand the economic forces underlying this institution. We utilize a previously untapped data source, Gwendolyn Hall (1999), to examine the market for slaves in Louisiana, both in New Orleans and outside of New Orleans. We are able to study the process of price determination in two separate markets over a period of 95 years for the former and 64 years for the latter. We are able to analyze the factors influencing price determination as well as the wealth transfers generated by legislation prohibiting slave imports after January 1, 1808 and shocks to the cotton market as a result of the Jeffersonian embargo and the War of 1812.
- Wait a Cotton Pickin Minute! A New View of Slave Productivity
- Alan L. Olmstead, University of California, Davis
- Paul W. Rhode, University of North Carolina
Abstract: Questions concerning slave efficiency have long fascinated economists and historians, and over the past 30 years, few issues have been more contentious. Cliometricians have generally focused on cross sectional issues such as whether slave plantations were more efficient than free-labor farms. This approach has ignored an older tradition emphasizing the role of biological innovations in propelling the South’s growth. In resurrecting this older view, our interest is decidedly dynamic. Building on a new sample of over 400,000 cotton picking observations drawn from the archives of over 60 plantations, we show that the average amount of cotton picked per slave per day tripled over the 1810-60 period. Our findings bear on a wide range of issues including the changes in slave, cotton, and land prices, the forces driving the growth of cotton output and the westward movement of the cotton frontier, as well as standard static efficiency comparisons.
- Accomplishment and Abandonment: The Freedmen's Bureau and Black Literacy Rates
- William Troost, University of California, Irvine
Abstract: The racial gap in educational achievement has been large and mirrored inequality in economic outcomes. While economists such as Robert Margo have done an excellent job in documenting these gaps from 1880 onwards, much of the literature ignores the period immediately following emancipation. The Freedmen’s Bureau was a governmental agency set up to assist freed slaves in their transition to their new lives. Perhaps its most important function was in establishing a system of schools in the South. I have obtained data from the US archives on Freedmen Bureau schools. Coupling this information with individual census data, I estimate the effect that these schools had on black literacy. While many have minimized the impact of this agency, this paper suggests bureau schools had a strong effect on literacy and school attendance rates. These results suggest bureau schools had a large impact on the economic and social development of the South.
B: MACROECONOMIC GROWTH AND POLICY
- U.S. Economic Growth in the Gilded Age
- Alexander J. Field, Santa Clara University
Abstract: In the immediate postwar period, Moses Abramovitz and Robert Solow both examined data on output and input growth from the first half of the twentieth century and reached similar conclusions. In the twentieth century, in contrast with the nineteenth, a much smaller fraction of real output growth could be swept back to the growth of inputs conventionally measured. The rise of the residual, they suggested, was an important distinguishing feature of twentieth century growth. This paper identifies two problems with this claim. First, TFP growth virtually disappeared in the U.S. between 1973 and 1995. Second, TFP growth was in fact quite robust between the end of the Civil War and 1906, as was in fact acknowledged by Abramovitz in his 1993 EHA Presidential address. Developing a revised macroeconomic narrative is essential in reconciling our interpretation of these numbers with what we know about scientific, technological, and organizational change during the gilded age.
- Low Interest Rate Policy in the Early 1930s in Japan: A Myth of ‘the Keynesian before Keynes’
- Masato Shizume, Kobe University
Abstract: Departing from the gold standard was the necessary condition for early recovery from the Great Depression in 1930s. Then, was it the sufficient condition for independent monetary policy? I explore Japan’s monetary policy during the interwar period, focusing on the macroeconomic policy innovation in the early 1930s. I explore the contemporary view of the Japanese policymakers, making use of newly available archives from the Bank of Japan. I derive a new series of representative long-term interest rate data from the market price of a government bond. Then, I explore the relationship between long-term interest rates of Japan and the two financial centers, Great Britain and the United States. The Japanese experience tells how strong the Golden Fetters were during the post-gold-standard era. The institution of the gold standard had an enduring influence on Japanese policymakers, notably even after its constraints were no longer formally binding.
- Economic Modernization in Latin America and the Caribbean between 1890 and 1930: A View from the Modern Energy Consumption
- César Yáñez, Universidad de Barcelona
- M.d.Mar Rubio, Universitat Pompeu Fabra
- Albert Carreras, Universitat Pompeu Fabra
Abstract: The consumption of modern energy is taken as a proxy for the degree of economic modernization. This approach offers a quantitative basis for evaluating the relative economic progress of 23 Latin American and Caribbean countries for the period 1890-1930. We find that not all countries were equally able to profit from the opportunities brought by the first globalization, that the First World War did not have the same impact in the entire region, and that Latin American economies had heterogeneous behaviors over the 1920s and on the eve of the Great Depression. In general, it is clear that it mattered to be a large economy within the changing international framework. Small countries were more vulnerable to the international closure from the 1920s onwards. For the first time, a comparative homogeneous indicator is presented for the entire region for a period of 40 years for which no much quantitative evidence was previously available.
Session 5: Sunday 10:30 a.m.
A: THE ECONOMICS OF COOPERATION
- The Limits of Equality: Insights from the Israeli Kibbutz
- Ran Abramitzky, Stanford University
Abstract: The Israeli Kibbutzes, which are voluntary communities based on income equality, are puzzling since they might unravel due to moral hazard and adverse selection. How did such communities persist within a capitalist environment? What level of equality can they sustain? This paper employs unique Kibbutz-level and individual-level data sets to address these questions. An asymmetric wealth shock provides a “natural experiment” that allows me to identify the determinants of the level of equality and exit rates. The main findings are that productive members are more likely to leave, that common wealth is a lock-in device that makes exit costly, and that wealthier Kibbutzes are more likely to choose a higher level of income equality. All the patterns in the data are consistent with a simple model of optimal insurance under limited commitment of members to stay in their Kibbutz once their type is realized, which stands in contrast to the view of Kibbutzes as primarily ideological entities.
- Free-Riding, Collective Action, and Farm Interest Group Membership
- James I. Stewart, Reed College
Abstract: American farmers wield disproportionate political power. Historically, a source of their power has been their ability to organize interest groups. This paper studies membership in one such group, the Dakota Farmers’ Alliance between 1885 and 1890. Like other special interest groups, the Dakota Farmers’ Alliance faced the dilemma of free-riding. I test two models of how the group managed this problem: the model of Olson (1965), in which interest groups provide private benefits to their members, and the model of Bendor and Mookherjee (1987), in which the internal structure of an interest group affects its ability to monitor and sanction free-riders. I find support for both models. After controlling for self-selection, members of the Alliance accumulated wealth significantly faster than non-members. Also, social norms of cooperation influenced the decision to join township chapters of the group. These findings have implications for understanding the changing sources of farmers’ power and U.S. institutional development.
- Ceremonial Expenditure as a Response to Risk in Pre-Independence India: Evidence from the All-India Rural Credit Survey of 1951
- Susan Wolcott, SUNY-Binghamton
Abstract: The indebtedness of peasants, the precarious nature of agriculture, and the wastefulness of large ceremonial expenditures are all perennial themes in Indian history. This paper combines them. I examine a rich data set on the income, expenditure and debt of rural cultivators in 75 Indian districts in 1951, and add a measure of the district's average rainfall variance. I find that the indebtedness of a district's cultivators is strongly related to the variance of rainfall. What is more surprising is that there is also a strong relationship between climactic risk and the ratio of ceremonial expenditure to the value of this year’s production. I argue that this latter correlation is consistent with the hypothesis that these expenditures were, in part, a response to the riskiness of life in pre-industrial India. It is possible that they may have been useful in sustaining the informal credit networks which mitigated idiosyncratic risk.
B: INSTITUTIONAL RESPONSES TO EXTERNAL THREATS
- Lawlessness at the Desert Frontier: Analysis of Protection Payments from Ottoman Gaza, 1525-55
- Haggay Etkes, Hebrew University
Abstract: Bandit nomad tribes were a persistent threat to the Ottoman attempts to enforce law and order in Grater Syria along the 16th century. Often, these tribes were armed and looted villages, merchants and even pilgrims. One of the policy tools used by the Ottomans for pacifying the tribes was bribing them by allocating to them part of the taxes imposed on villages. This paper explores the determinants of these centrally bargained protection payments using a rich data set from the Ottoman district of Gaza (1525-55), which was located at the desert frontier. This four period panel dataset – which was recently derived from Ottoman archives – contains details on the population, production and protection payments of about 130 villages and 200 farms; hence, it is a rare administrative source for studying the determinants of protection payments, as well as for considering the dynamic implications of this institution, including economic growth.
- Rulers Ruled by Women: An Economic Analysis of the Rise and Fall of Women's Rights in Ancient Sparta
- Robert K. Fleck, Montana State University
- F. Andrew Hanssen, Montana State University
Abstract: In ancient Sparta, women owned much of the farmland, and enjoyed other extraordinary rights. We offer an economic explanation. The defining moment for Sparta was its conquest of a neighboring land and people, which changed the marginal products of Spartan men’s and women’s labor. To exploit the gains from reallocating labor – specifically, to provide the appropriate incentives and human capital formation – men granted women property (and other) rights. Consistent with our explanation for the rise of women’s rights, when Sparta later lost the conquered land, rights for women disappeared. Two general conclusions help explain the historical rarity of women’s rights. First, in contrast to the norm, the optimal (from the men’s perspective) division of labor among Spartans involved women in work that was not easily monitored by men. Second, the rights held by Spartan women may have been part of an unstable equilibrium, containing the seeds of its own destruction.
- Ottoman Conquests and European Ecclesiastical Pluralism
- Murat Iyigun, University of Colorado
Abstract: This paper emphasizes that the evolution of religious institutions in Europe was influenced by the expansionary threat posed by the Ottoman Empire’s territorial expansion in Europe between the mid-15th century and the 17th century. Various historical accounts have suggested that the Ottomans’ rise helped the Protestant Reform movement as well as its various offshoots, such as Zwinglianism, Anabaptism, and Calvinism, survive their infancy and mature. In an attempt to conceptualize these effects, I develop a model in which religious affiliation between otherwise heterogeneous and conflicting groups can lead to cooperation (or a secession of hostilities) when such groups are faced with the threat of stronger rivals of a different affiliation. The general patterns of conflict in continental Europe as well as those between the Protestant Reformers and the Counter-Reformers between the 15th and 17th centuries support the idea that Ottoman military conquests in Europe significantly reduced intra-European feuds.