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Local Shocks and Long-Run Persistence

Paper Session

Sunday, Jan. 5, 2020 1:00 PM - 3:00 PM (PDT)

Marriott Marquis, Grand Ballroom 12
Hosted By: American Economic Association
  • Chair: Donald Davis, Columbia University

Pandemics, Places, and Populations: Evidence from the Black Death

Remi Jedwab
,
George Washington University
Noel Johnson
,
George Mason University
Mark Koyama
,
George Mason University

Abstract

The Black Death killed 40% of Europe’s population between 1347-1352,
making it one of the largest shocks in the history of mankind. Despite
its historical importance, little is known about its spatial effects and the
effects of pandemics more generally. Using a novel dataset that provides
information on spatial variation in Plague mortality at the city level, as
well as various identification strategies, we explore the short-run and
long-run impacts of the Black Death on city growth. On average, cities
recovered their pre-Plague populations within two centuries. In addition,
aggregate convergence masked heterogeneity in urban recovery. We show
that both of these facts are consistent with a Malthusian model in which
population returns to high-mortality locations endowed with more rural
and urban fixed factors of production. Land suitability and natural and
historical trade networks played a vital role in urban recovery. Our study
highlights the role played by pandemics in determining both the sizes and
placements of populations.

Dynamics of a Malthusian Economy: India in the Aftermath of the 1918 Influenza

Dave Donaldson
,
Massachusetts Institute of Technology
Daniel Keniston
,
Louisiana State University

Abstract

The 1918 influenza epidemic struck India when the subcontinent was mired in its
long-term Malthusian equilibrium of low population growth and stable per-capita consumption. Its terrible death toll left survivors with additional agricultural land, which
we show they rapidly put to agricultural use with no decrease in yields. We explore the
extent to which this increased per-capita wealth gave rise, over the ensuing decades, to
heightened investments in both child quantity as well as child quality. Consistent with
most Malthusian unified growth theories, we find that individuals in heavily affected
districts had more children in the aftermath of the influenza. We also find that these
children were taller and better educated. Our results suggest that the preference for
child quality existed even in societies that appeared Malthusian both to contemporary
observers and modern historians.

The Effect of Natural Disasters on Economic Activity in United States Counties: A Century of Data

Leah Boustan
,
Princeton University
Matthew Kahn
,
University of Southern California
Paul Rhode
,
University of Michigan
Lucia Yanguas
,
University of California-Los Angeles

Abstract

More than 100 natural disasters strike the United States every year, causing extensive property destruction and loss of life. We construct an 80 year panel data set that includes the universe of natural disasters in the United States from 1930 to 2010 and study how these shocks affected migration rates, home prices, and poverty rates at the county level. Severe disasters increased out-migration rates by 1.5 percentage points and lowered housing prices/rents by 2.5–5.0 percent, but milder disasters had little effect on economic outcomes.

Recessions and Local Labor Markets

Bryan Stuart
,
George Washington University
Brad Hershbein
,
W.E. Upjohn Institute for Employment Research

Abstract

This paper studies the impacts of each recession in the U.S. since 1973 on local labor markets. Using variation in sharp employment changes that occur during recessions, we find that every recession has led to persistent declines in employment, population, the employment rate, and earnings per capita. Four to six years after each recession, a one standard deviation increase in local recession severity leads to a 1-3 percent decrease in the employment rate and earnings per capita. We also find that higher transfers mitigate 5 to 20 percent of the decline in earnings. Our results demonstrate that recessions have long-lasting impacts on local labor markets and that out-migration and transfers provide partial insurance against these shocks.
Discussant(s)
Daniel Keniston
,
Louisiana State University
Tom Vogl
,
University of California-San Diego
Richard Hornbeck
,
University of Chicago
Katherine Eriksson
,
University of California-Davis
JEL Classifications
  • R0 - General
  • J0 - General