Deep Roots of Economic Development
Sunday, Jan. 8, 2017 1:00 PM – 3:00 PM
Hyatt Regency Chicago, Grand Suite 3
- Chair: Melanie Meng Xue, University of California-Los Angeles
Economic Consequences of Coercive Institutions: Evidence from the US Convict Labor System
AbstractI explore institutions of forced labor in the United States of America. Competition with convict labor producing low-quality goods made returns to capital more attractive relative to return to labor, negatively affecting low-skilled population and benefiting capital-owners. By using a new dataset of US convict labor camps at the end of 19 century, I show that convict labor camps increased capital-labor ratio and decreased manufacturing wages of women. In addition, those counties currently have lower absolute upward mobility and higher relative upward mobility. I use the creation of National Prison Association in 1870 in Cincinnati, Ohio as a quasi-natural experiment. Inspired and organized solely by Rev. Enoch Wines, that event led to a creation of industrial and agricultural departments at prisons across the US. I use distance to Cincinnati as an instrument for convict labor camps output to show that the effect of convict labor on historical and contemporary outcomes is causal. I find that one standard deviation increase in the value of prison-made goods increased capital-labor ratio and decreased average wage of women in manufacturing by 16% and 10% of their standard deviations, respectively. Moreover, 1% increase in a value of goods produced by convicts resulted in a decrease of the probability of a person being born in lower income quintile to move into the top quintile by 0.42 percentage points. I use a series of robustness and sensitivity checks, and placebo tests to ensure that results are indeed causal.
Blood Rubber: The Effects of Labor Coercion on Institutions and Culture in the DRC
AbstractWe examine how historical exposure to extractive institutions affects long-term development in the case of the Congo Free State (CFS). The CFS granted concessions to private companies that used violent tactics to collect rubber. Local chiefs were co-opted into supporting the rubber regime, and individuals struggled to fulfill mandated quotas as natural rubber became increasingly scarce. We use a geographic regression discontinuity design along the former concession boundaries to show that greater exposure to extractive institutions causes significantly worse education, wealth and health outcomes. We then use survey and experimental data collected along a former concession boundary to examine how the effects of extractive institutions persist through local institutional quality and cultural norms. Consistent with their historical co-option by the concession companies, we find that chiefs within the former concessions are of lower quality and less accountable to their constituents. However, we find that individuals within the concessions are more trusting and have stronger norms of redistribution. The results demonstrate how historical events of short duration can have long-lasting effects on institutions and cultural norms.
The Long-Run Effects of Affirmation Action: Evidence from Imperial China
AbstractWe use a difference-in-differences specification to study the effects of "affirmative action” policies on human capital accumulation, social mobility and regional inequalities. Qing China used an examination system to select government officials. We examine a policy reform in 1712 which allowed individuals from disadvantaged provinces to pass the exam with a lower score. We find that both in the short run and long run, this reform led to positive changes in those provinces. However, looking within provinces, the effects were highly heterogeneous. The gains were mostly concentrated in the very few prefectures that were the most advanced before the reform, whereas the losses were disproportionately born by the disadvantaged prefectures within the more advanced provinces.
Katherine A Eriksson,
University of California-Davis
University of Warwick
University of Munich
- N3 - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
- Z1 - Cultural Economics; Economic Sociology; Economic Anthropology