Institutions and economics

Alex Klein, Sheilagh Ogilvie, 14 January 2018

A famous hypothesis posits that serfdom was caused by factor endowments, specifically high land-labour ratios. Historical evidence seems to refute this idea, but with substantial identification problems. This column uses microdata for more than 11,000 Bohemian villages in the year 1757 to control for other potential influences on serfdom. The results support the factor endowments hypothesis, with higher land-labour ratios intensifying serfdom, suggesting that institutions are partially shaped by economic fundamentals.

Julia Cagé, 23 December 2017

Conventional wisdom holds that more media competition makes citizens more informed, and that it improves the functioning of democracies. This column tests this claim using data on local newspaper circulation in France. It finds that increased media competition leads to business stealing and to a decrease in the coverage of public affairs news by local newspapers. It also has a negative impact on local election turnout. While competition is key to the quality of the media environment, the results highlight that more media competition is not necessarily socially efficient.

Chen Lin, Randall Morck, Bernard Yeung, Xiaofeng Zhao, 22 December 2017

Chinese stocks rose sharply overall on news of President’s Xi’s 2012 policy cracking down on corruption, but non-state-owned enterprises in the country’s least liberalised provinces actually lost value. This column argues that China has taught the world something interesting – that prior market liberalisation makes anticorruption reforms more valuable. Once market forces are activated, bribe-hungry officials no longer grease the wheels but instead become pests and invite eradication.

Raul Sanchez de la Sierra, 19 December 2017

We have theories of why states form, but until now no systematic data on the process. This column uses a new dataset on 650 locations in the Democratic Republic of the Congo to explain why armed actors may create the functions of a state. When a village's output was valuable but could not easily be taxed, armed actors developed sophisticated fiscal and legal administrations to extract revenue. Household welfare improved only when these stationary bandits had ties to the population.

Guilhem Cassan, Lore Vandewalle, 09 December 2017

Many policies are designed along a particular identity dimension, such as gender or ethnicity. However, such efforts overlook the fact that individuals are associated with several identity dimensions at a time. Using Indian data, this column demonstrates how the intersection of different identity dimensions may lead to unanticipated effects. It shows that political quotas for women in local elections change policies not only in favour of women, but also in favour of low castes.

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