Historical Perspective on Cities, Institutions and Economic Activity
Sunday, Jan. 6, 2019 8:00 AM - 10:00 AM
- Chair: Laura Alfaro, Harvard University
How Merchant Towns Shaped Parliaments: From the Norman Conquest of England to the Great Reform Act
AbstractAfter centuries of stagnation in the “Dark Ages,” the Commercial Revolution led to a boom in economic activity and urbanization across Western Europe. The surge in trade and commerce that began in the 11th century was followed by the emergence of self-governing merchant towns. Soon after, these merchant towns gained representation in regional and national parliaments. This paper establishes the mechanism by which trade led to parliamentary representation, via municipal autonomy. We focus on England after the Norman Conquest of 1066 and build a novel comprehensive dataset of 554 Medieval towns (boroughs), tracking their institutional development over eight centuries. We document a two-step process: First, inefficiencies in the king’s centralized system of tax collection became increasingly distortive to trading towns. In a mutually beneficial solution, merchant towns paid higher annual taxes in exchange for Farm Grants – the right of self-governed tax collection, cutting out royal officials. Second, Farm Grants were stepping stones towards representation in the English Parliament: To raise extra-ordinary taxes (e.g., for wars) from self-governed towns, the king had to negotiate with them – and negotiations took place in Parliament. We also show that Medieval self-governance had important long-term consequences and interacted with nationwide institutional changes. Boroughs with Medieval Farm Grants continued to have broader
voting rights in the 17th to 19th centuries, they raised troops to back Parliament against the king during the Civil War in 1642, and they supported the Great Reform Act of 1832 that extended the franchise.
Foreign Powers, Domestic Integration, and Firms: Evidence from Shanghai in the Era of Concessions
AbstractWe investigate the influence of institutions on industrial and firm growth by exploiting the unique historical context in Shanghai, China, during the late 19th and early 20th century. While there is a general consensus in the current literature that institutions are important for economic growth, the empirical assessment of this question has traditionally relied on comparing countries with different institutions to each other and over time. This has made it challenging to disentangle institutions from other location specific factors that may affect economic growth. Another challenge has been to disentangle which aspect of the broad term “institutions” really matters for growth. Historical Shanghai provides an intriguing context for studying our research question. First, because multiple foreign political powers divided the city into segments that shared similar natural advantages (i.e., location fundamentals) but were ruled by distinct institutions in a period displaying remarkable openness to trade, investment, and immigration, this provides us with a unique context for distinguishing the economic influence of institutions from the impacts of location fundamentals. Second, we were able to compile a new dataset on firms in Shanghai between 1872 and 1941, covering firm level outcomes related to employment, trade, and firm organization. Third, we analyze the minutes of the municipal council meetings and the texts of the municipal law and measure several aspects of institutions at a finer level than previously done. Since all of our datasets vary over time and cover a large time period, we test how institutions change over time, and relate this to the transmission of foreign shocks, as well as to firm level outcomes.
Effects of Copyrights on Science – Evidence from the United States Book Republication Program
AbstractCopyrights for books, news, and other types of media are a critical mechanism to encourage creativity and innovation. Yet economic analyses continue to be rare, partly due to a lack of experimental variation in modern copyright laws. This paper exploits a change in copyright laws as a result of World War II to examine the effects of copyrights on science. In 1943, the US Book Republication Program (BRP) granted US publishers temporary licenses to republish the exact content of German-owned science books. Using new data on citations, we find that this program triggered a large increase in citations to German-owned science books. This increase was driven by a significant reduction in access costs: Each 10 percent decline in the price of BRP book was associated with a 43 percent increase in citations. To investigate the mechanism by which lower book prices influence science, we collect data on library holdings across the United States. We find that lower prices helped to distribute BRP books across US libraries, including less affluent institutions. Analyses of the locations of citing authors further indicate that citations increased most for locations that gained access to BRP books. Results are confirmed by two alternative measures of scientific output: new PhDs and US patents that use knowledge in BRP books.
- O4 - Economic Growth and Aggregate Productivity
- N2 - Financial Markets and Institutions