Agricultural Risk and the Spread of Religious Communities

New EHES working paper

Is the spread of religious communities related to economic risk? Historically, religious communities have often been the only source of support beyond the family. The social support provided by religious communities appears to be a type of informal mutual insurance especially valuable in historical agricultural societies exposed to much economic risk and without formal insurance mechanisms. Economic risk could therefore have contributed to the spread of today’s major religious communities, and beliefs in the spiritual rewards of mutual aid and charity, but empirical evidence is lacking.

"Stained glass window" by freedigitalphotos.net

In their new EHES working paper, Philipp Ager and Antonio Ciccone use historical census data for the United States to examine the link between economic risk and the spread of religious communities. The authors’ central conclusion is that religious communities are more widespread where populations face greater common risk.

The paper integrates two existing ideas – religious communities can sustain mutual insurance against at least some risks, and religious membership is a social activity that reduces time for other activities – into a model where agricultural output of farmers in a location is subject to idiosyncratic risk and to common, county-level rainfall risk. While idiosyncratic risk is partially insurable within a county’s religious communities, common rainfall risk is not. The authors show that when relative risk aversion is in the empirically relevant range, the value of mutual insurance against idiosyncratic risk within a county’s religious communities increases with common rainfall risk. This implies that a larger part of the population will be members of a religious community in counties with greater rainfall risk, holding expected agricultural productivity constant.

Ager and Ciccone evaluate this hypothesis by examining whether in the nineteenth century United States, churches in counties with greater rainfall risk had more total members or a greater combined seating capacity relative to population. In the United States, religious communities are widely regarded as having been the main source of social assistance, especially in agricultural regions, until the rise of government social spending at the beginning of the twentieth century. The available financial accounts of nineteenth-century churches indicate substantial expenditures on local relief and charity. There is also extensive historical evidence that local religious community members supported each other in case of need. Consistent with the historical narrative and the theoretical analysis the authors find a statistically and quantitatively significant link between membership in religious communities and rainfall risk in 1890, 1870, and 1860.

This blog post was written by Philipp Ager, Assistant Professor of Economics at the University of Southern Denmark, Odense.

The working paper can be downloaded here:
http://www.ehes.org/EHES_74.pdf

Participative Political Institutions and City Development 800–1800

New EHES working paper

Does contemporary economic development have medieval roots? 

Fabian Wahl is a PhD student
at University of Hohenheim

Numerous studies suggest that the institutional, educational and technical innovations connected with the commercial revolution in the late medieval laid the ground for the later European Industrial Revolution. 

However, the late middle ages also saw another institutional innovation, namely the emergence of participative political institutions (PPIs) in cities that have not been systematically analyzed until now. The development of these institutions marked the first turn towards more inclusive institutions since the ancient world. 

The recent EHES discussion paper by Fabian Wahl seeks to understand the consequences of this gradual shift of political institutions towards the participation of larger groups of citizens for the development of cities in the subsequent centuries. In doing so, it is the first study exploiting the remarkable heterogeneity in the participativeness of political institutions in the cities of the Holy Roman Empire in the later medieval and early modern period.

Concerning the consequences of participative political institutions for long-run city development, existing studies came to different conclusions. On the one hand, one can expect them to have a positive effect as they are associated with limited government, increased checks and balances, better fiscal and economic policy, a more credible commitment to property rights, less inequality and more civic capital. On the other hand, it is also known that, given the nature of the political system of medieval cities, those institutions could also give rise to rent-seeking, oligarchisation and conflicts within different groups of the elite. Moreover, the participative political institutions in medieval cities were closely connected with the empowerment of guilds. As there is an ongoing scholarly debate about whether the impact of guilds for economic prosperity was positive or negative one should not have a clear expectation about the effect of these institutions. Instead, it is likely that the effect of different types of participative political institutions is different and probably short-living.

The main data used for the empirical investigation of these issues originate from the “Participative Political Institutions in Pre-Modern Europe” database created by the author (Wahl 2014). This database contains information on the three most important types of participative political institutions in 104 cities in Germany, Austria, the German-speaking area of Switzerland (plus Geneva), Alsace-Lorraine and the Low Countries for every hundred year period between 800 and 1800 AD. These institutions are (i) the existence and degree of guild participation in the city council, (ii) the existence of a participative election mode of the city government and (iii) whether there was some kind of institutionalized burgher representation (e.g. a regularly meeting community assembly). As the overall effect of the universe of participative political institutions is of interest in its own right he also develops a single variable representing the overall impact of those institutions. This variable is obtained by conducting a factor analysis with the individual measures of participative political institutions. 

Furthermore, the author makes use of the comprehensive city level panel data set of Bosker et al. (2013) to supplement the data on participative political institutions. This data set also contains a variable for the existence of communal institutions in cities and hence enables to assess the effect of the participative political institutions at the extensive margin. 

To become familiar with the data, it could be instructive to have a visual view on the main data used in the study. Therefore, Figure 1 shows a map visualizing the spatial pattern of participativeness of political institutions in the sampling area. To be precise, the maps shows which city belongs to which quantile of the Participative Institutions Index (averaged over all time periods) distribution. Thus, larger circles indicate that a city belongs to a larger quantile. The highest degree of participativeness is shown by the institutions in cities located in the western (especially south western) part and middle part of Germany, while in the Low Countries, the east, south-east and north of the sampling area participativeness is not so pronounced. The area with the most participative political institutions thus approximately corresponds to the area of the highest political fragmentation, the area were the most free and imperial cities are located and were many important trade and production centers are located. 

Figure 1: Participativeness of Political Institutions of a City (Averaged over all Centuries)

The consequences of participative political institutions on city development are investigated by means of panel data regressions that allow to introduce e.g. city fixed effects to account for time-invariant heterogeneity. First, I consider the effect of each kind of PPI individually and then I present results using the single index. Separate regressions are conducted for the medieval and the early-modern period and for the Low Countries and the German-speaking area and the institutional variables are interacted with century dummies and indicating whether a certain type of participative political institution had already existed for one, two, three, four, five or six centuries in a city in a certain century to test for spatial and temporal heterogeneity in the effect of PPIs. 

From the empirical analysis, several important results emerge. When considering the effects of the different types of PPIs individually and pooled over all cities and periods, the author finds that primarily the extensive margin, i.e. the existence of communal institutions like city councils, had a robust and positively significant effect on city population. However, in the German-speaking area the existence of participative elections had positive effects on city growth. 

Regarding the notion that existing political institutions and regimes are subject to a process of degeneration and increasingly egoistic, rent-seeking policy the author finds a pattern of an increasingly negative effect the longer an institution existed, in the case of cities with guild constitutions. In addition, participative elections only had a significant positive impact in the first century of their existence and afterwards the effect became smaller and insignificant. This highlights the short-lived character of the positive impact of participative political institutions in pre-modern cities. 

When considering the Participative Institutions Index as measure of the overall impact of the different types of participative political institutions, there is only weak empirical evidence for a significant positive impact. However, the positive effect is stronger in the German-speaking area and prior to 1500 AD.

Finally, the author investigates the temporal evolution of the impact of participative political institutions from their first occurrence in 1200 AD until 1800 AD by interacting the participative political institutions index with century dummies. Figure 2 shows the resulting coefficient of the interaction term and the 95 % confidence intervals. For all observations the study detects significant positive effects in 1200 but insignificant effects in the other centuries. This implies that while these institutions contributed to the commercial revolution and the rise of cities, their impact in later centuries was limited. 

Figure 2: Temporal Evolution of the Impact of Participative Political Institutions

The blog post was written by Fabian Wahl and the working paper can be downloaded here:

http://www.ehes.org/EHES_73.pdf

A Re-interpretation of UK Corporate Law and Corporate Governance before 1914

A new EHES Working paper by James Foreman-Peck and Leslie Hannah 

Companies were the principal institution through which investment was channelled into the nineteenth and early twentieth century economy. The close cross-country correlation of company numbers and GDP around 1910 is therefore no surprise (figure 1). In the top right of the figure are the United States and other regions of recent European settlement. Just below them, and almost as intensive in companies per head of population, is one of the largest and certainly the richest of the ‘old’ countries, the United Kingdom.

Figure 1. Companies and GDP 1910/1913

Although companies created opportunities for higher productivity and income in nineteenth century Britain they also were an unprecedented chance for fraud and misappropriation of shareholders funds by unscrupulous directors. In Victorian literature dishonest companies and their officials abound  –  Charles Dicken’s Anglo-Bengalese Disinterested Loan and Life Assurance company (Martin Chuzzlewit 1844) and  Anthony Trollope’s financier Augustus Melmotte in The Way We Live Now (1875) are instances.

Satirical cartoons in periodicals pilloried crooked and predatory directors - figure 2 represents the law as the giant killer of a joint stock banker. These concerns might reflect the widespread damage that such companies wrought. But given the correlation noted in figure 1 it seems more likely that public concern gave rise to a regulatory framework that controlled such potential damage. Yet the consensus among legal and economic historians is that British law between 1844 and 1914 provided little protection to corporate shareholders. We contend that the consensus is mistaken.

Figure 2. Cartoon satirising speculation and fraud in joint stock companies, from 1858. 

Until towards the end of the nineteenth century, statutory companies accounted for the great bulk of capital quoted on UK stock exchanges. These companies were subject to the Companies Clauses Consolidation Act (CCCA) of 1845 that required substantial shareholder protection. The Act prescribed corporate governance and liability rules for all subsequent statutory incorporations in 164 model clauses. Hence the traditional view that legal compulsion played no role in nineteenth century British corporate governance is only sustainable for the companies registered under the much laxer Companies Acts. Yet we find evidence that even these companies usually voluntarily adopted governance rules that were very similar to those compelled by the CCCA for statutory companies. The professionals guiding registered companies through the process of initially offering shares to the public probably were “nudged” by the earlier legislation and the default table A of the Companies Acts. The role of law in spreading good corporate governance practices in British quoted companies therefore has been underestimated.
                 
Shareholder protection by corporate governance is now sometimes summarised by “anti-director” rights. The CCCA rules score quite highly on this index. Clause IX allowed attendance at general meetings of shareholders whose names were on the register, without the deposit of shares , scoring one on the index. In contrast to the lax Companies Acts, shareholders under the CCCA had rights to new shares if existing shares stood at a premium to par value (clause LVIII), increasing the score to two. Holders of at least one-tenth of the share capital  could requisition an extraordinary general meeting, if the directors failed to do so within 21 days of a formal request (clause LXX), increasing the score to three. Proxy votes were routinely allowed, if the nominated proxy was also a shareholder (clause LXXVI), raising the score to four. Tiered or cumulative voting rules were probably intended to protect minorities against majority oppression (raising the score to 5), though there are other interpretations.

UK statutory companies under the 1845 CCCA then generally scored four or five out of six on the anti-director rights index. This was a level not legally required in the UK registered company sector until the last quarter of the twentieth century. Moreover boards of CCCA companies wishing to modify their statutes had to obtain parliamentary approval, deterring directors from attempting prejudicial changes and giving shareholders an opportunity to lobby against them. The obligatory provisions for removing directors and calling extraordinary general meetings also made boards reluctant to introduce major strategic moves without consulting a shareholders’ meeting.

Turning to registered companies, our investigation considered changes actually made in their articles of association before applying for stock exchange official listing. These show company promoters recognised that encouraging good corporate governance brought advantages for raising capital. Articles of association of large registered companies submitted to the London Stock Exchange Listing Committee show high scores on the anti-director rights index, even though the Companies Acts did not require it. The freedom to attend meetings without prior share deposit and proxy voting were universal in our large quoted sample, and only two companies failed to provide for minority rights to call a meeting. Pre-emption rights were more varied, but the general requirement for shareholders to permit any increase in capital usually gave those without explicit pre-emption rights the power to insist on them as a condition of any issue. Thus many registered companies scored four (or, on a stricter interpretation of pre-emption rights, three) on the anti-director rights index.

In the complex Victorian commercial society an (endogenous) culture of business morality and reciprocal trust, as well as the long arm of the law both played roles in creating an efficient business environment. That they did so was among the reasons why the London Stock Exchange remained the largest in the world before 1914. Their joint effectiveness also explains why numbers of companies with ownership substantially divorced from control was comparable to those of today. Nineteenth century British ‘anti-director’ protections for shareholders were not as different from today’s as legal analysts have suggested.

This blog post was written by:

James Foreman-Peck and Leslie Hannah, both at Cardiff University

The working paper can be downloaded here: http://www.ehes.org/EHES_72.pdf

Beyond GDP: A Long-Term View on Human Wellbeing and Inequality

EHES Summer school - apply now

How much better is life today than it was in the past? And do we always need income growth to improve welfare? This summer school is devoted to exploring a new research avenue that uses broad indicators of human welfare and the standard of living to measure levels and growth of economic well-being worldwide.

During the last centuries economic growth as conventionally measured by gross domestic product per capita has shown big swings and long periods of disappointing performance. But at the same time in many countries people became on average healthier, taller, and older, and are enjoying increasing leisure time. Historical research into the human condition and level of living has revealed considerable growth trends in the general biological standard of living of world citizens. To understand this paradox of sometimes disappointing economic outcomes and favourable changes in the human condition, we need to re-examine and analyse indicators of human well-being such as economic living standards and broader human development standards.

This summer school focuses on the comparative study of income growth and will study its causal relationship with inequality, health, and leisure, which are widely seen as crucial indicators in the measurement of economic welfare.

The summer school is endorsed by the European Historical Economics Society. It is hosted by the Groningen Growth and Development Centre, a research centre affiliated with the Faculty of Economics and Business. The Summer School will last for 5 days and will include lectures of key-speakers such as Prof. Jan Luiten van Zanden (University of Utrecht) and Prof. Leandro Prados de la Escosura (Universidad Carlos III de Madrid). The afternoon sessions will be devoted to presentations and discussions of the research topics of the participants (doctoral students and postdoctoral researchers).

Dates 
28 June - 3 July 2015
Application deadline: 1 April 2015

Level 
PhD students and scholars who recently completed their doctorate

Coordinators 
Prof. Dr. Herman de Jong, University of Groningen
Dr. Joost Veenstra, University of Groningen

Fee 
€ 200 (including housing)

Apply now

Download the flyer

Contracts and cooperation: The relative failure of the Irish dairy industry in the late nineteenth century reconsidered

New EHES working paper

Eoin McLaughlin is a Leverhulme
 Early Career Fellow at University 
of St. Andrews

Ireland was one of the major dairying exporters on the London market in the early nineteenth century but lost its position of pre-eminence to Denmark by the close of the century. The question Henriksen, McLaughlin and Sharp seek to address is why the establishment of cooperative creameries in Ireland failed to halt the relative decline of her dairy industry. Henriksen, McLaughlin and Sharp compare the Irish experience with that of the market leader, Denmark, and shows how each adopted the cooperative organisational form, but they show that an important difference was institutional. Specifically, the two countries differed regarding the enforcement of vertically binding contracts, which are considered to be of vital importance for the successful operation of cooperatives.

Henriksen, McLaughlin and Sharp trace key court cases involving cooperatives in Ireland that were sued by their members. They find continuing uncertainty regarding the validity of these contracts up until Irish independence.

Cooperative and non-cooperative creameries in Ireland 1908

Another key difference between Denmark and Ireland was the existence of a strong proprietary sector which was strongly opposed to cooperation (map 1), this led to increased competition for scarce milk supplies in the Irish countryside. This, combined with the inability to enforce vertically binding contracts and poor social capital, ultimately led to the relative failure of the Irish dairy sector.

This blog post was written by Eoin McLaughlin, Leverhulme Early Career Fellow at University of St. Andrews
The working paper can be downloaded here: http://www.ehes.org/EHES_71.pdf

The Heavy Plough and the Agricultural Revolution in Medieval Europe.

New EHES working paper

Did the heavy plough – as suggested by Lynn White Jr. and many others – lead to economic development during the Middle Ages? This question is investigated in a new EHES working paper by Andersen, Jensen and Skovsgaard, University of Southern Denmark.

Fig 1:  (a) the old plough, the ard,
and (b) the heavy plough

During the Medieval epoch the heavy plough spread across Europe. Heavy ploughs had a number of advantages compared to the old plough known as the ard (see Figure 1). These advantages derive from the addition of the mouldboard, which was used to turn the soil. By turning the soil, high-backed ridges were created. This was useful on poorly drained clay soil, as the ridges improved drainage. Turning the soil also improved weed control on these soils, since the ard provided insufficient damage to root system. Other advantages include e.g. bringing up lower level soil in which percolating water tended to concentrate plant nutrients. Hence, by allowing for better field drainage and access to the most fertile soils, the heavy plough stimulated food production and, as a consequence, “population growth, specialization of function, urbanization, and the growth of leisure” (White 1962, p. 44).

It is widely believed that the new plough had its breakthrough around AD 1000. Andersen, Jensen and Skovsgaard use this breakthrough year and the regional distribution of clay soil in a difference-in-difference setup in order to investigate whether the heavy plough did in fact lead to increased economic development after AD 1000 in areas that stood to benefit the most from the new technology.

Fig 2: Clay soils and the establishment of towns in Denmark.

Using establishment of towns in Denmark (see Figure 2) and cities in Europe as a measure of economic activity, the paper shows that regions more suitable for the heavy plough developed more strongly after its breakthrough (see Figure 3). In the study of Denmark the heavy plough explains more than 40 % of the new towns established between AD 1000 - AD 1300. In the case of Europe it explains more than 15 % of the new cities during the same period.

Fig. 3. The effects of the heavy plough on the establishment of Danish towns for each 25 year period

Overall, the paper corroborates the hypothesis that the heavy plough mattered for economic development. This suggests that increases in agricultural productivity can be a powerful driver of development.

The blogpost was written by Christian Skovsgaard, PhD Student, Department of Business and Economics at University of Southern Denmark.

The paper can be downloaded here: http://www.ehes.org/EHES_70.pdf

Origins of Political Change—The Case of Late Medieval Guild Revolts

New EHES working paper

Fabian Wahl is a PhD
student at the University
of Hohenheim

In the last decades there has been an increasing interest in the role of institutional innovations in the late medieval and early modern period for the “Rise of the West” and the “Great Divergence” between the Western countries and the rest of the world.

Within this literature, many papers have dealt with the consequences of the changes that occurred in this period in national and regional political institutions and regimes. However, these studies rarely provide a systematic empirical analysis of the origins of these institutional innovations. Yet, uncovering the roots of participative institutions in later medieval central Europe is essential for understanding the medieval roots of the “Great Divergence” and, more broadly, the origins of political change. Furthermore, it can also be informative about the relationship between economic and political changes as the political change of this period paralleled a notable economic recovery, i.e. the “commercial revolution”.

By investigating the origins of the late medieval guild revolts the recent EHES working paper by Fabian Wahl seeks to shed light on these issues. He argues that guild revolts constituted an important trigger for the turn towards more inclusive political institutions found in the later medieval period. Craftsmen and other groups of citizens, for instance, often gaining political rights in the aftermath of a guilt revolts.

The study is based on uniquely large and systematic data on the prevalence and outcomes of guild revolts in 104 cities in Germany, Austria, the German-speaking area of Switzerland (plus Geneva), Alsace-Lorraine and the Low Countries for every hundred year period between 800 and 1800 AD.  This data are part of a larger dataset on participative political institutions in pre-modern European cities, which the author had constructed and that can potentially be used to assemble many other research questions (see Wahl 2014).

To construct this database, the author reviewed more than 100 historical sources to ensure that the created variables cover as much of the universe of participative political institutions in later medieval cities as possible. The collected data is the most comprehensive and detailed collection of information about the late medieval guild revolts that the author is aware of.  Furthermore, it is the first data set on political institutions or regime types that is systematically defined on city-level and thus makes it possible to exploit variation in political institutions between cities. Based on this data set, the working paper provides an overview of the temporal evolution and spatial distribution of successful guild revolts. The latter is depicted in Figure 1 showing in which cities a successful guild revolt occurred and which outcome it had. Cities in which the guilds gained the majority or all of the seats in the city council are red colored, cities in which the guilds gained at least some seats in the city council are shown in blue.  Finally, cities in which there were no –or no successful—revolts are grey colored.

Guild revolts in 104 cities in Germany, Austria, the German-speaking area of Switzerland (plus Geneva),
Alsace-Lorraine and the Low Countries

Among other things, one can infer from the map that there were almost no cities with guild participation in the north of Germany and the Netherlands, i.e. in core area of the Hanseatic League. This is in line with historical evidence that the Hanseatic League often successfully suppressed guild revolts and defended the ruling merchant elite in its member cities. In central Germany (primarily today's Saxony, Lower Saxony, Hesse and Franconia) there is a medium frequency of guild participation and there are only a few cities with a guild constitution (Brunswick, Goslar and Magdeburg) all of which were members of the Hanseatic league and important political, commercial or ecclesiastical centers and therefore probably predestined for the outbreak of a guild revolt. In those cities the guilds succeeded in their attempts to gain political power despite the opposition of the Hanseatic League. There are almost no cities with guild participation in Bavaria what could be due to the comparatively strong position of the Bavarian ruler and to the fact that bishops there (as e.g. in Passau) were often successful in beating the guilds.

As a next step, an empirical analysis of the origins of the guild is conducted. The results of the performed probit regressions can be summarized as follows: The typical city subject to a guild revolt had a certain degree of autonomy, was located in a large territorial state, was in an area with low urban potential and suitability for agriculture, i.e. it dominated a rural area  with  relatively low agricultural productivity. Furthermore, it did not have any pre-existing participative political institutions and was a center of the textile industry. It had many neighboring cities located at a medium and large distance (between 50 and 250km away) that also experienced guild revolts, but not many in its direct vicinity that witnessed revolts. The significance and different signs of neighborhood spillovers shows how the guild revolts were determined by strategic considerations as well as chance and risk expectations.

In conclusion, a city's urban potential, i.e. its relative position to other cities and the degree to which it dominates the region surrounding it, as well as its agricultural productivity were important. This confirms the importance of the agrarian crisis and the Black Death for the occurrence of guild revolts. Being a commercial and especially an industrial center also played a certain role for the revolts that resulted in a complete success for the guilds.  This points to the existence of a virtuous cycle of economic and political opportunities where political change endogenously emerges from preceding economic changes.

The blog post was written by Fabian Wahl, PhD student at University of Hohenheim and the working paper can be downloaded here: http://www.ehes.org/EHES_69.pdf

FRESH: Economic Geography in Historical Perspective IIIS, Trinity College Dublin

This blog post was written by Ronan C Lyons, 

Assistant Professor of Economics at Trinity 

College Dublin and a Research Affiliate at the 

Spatial Economics Research Centre in LSE.

A FRESH meeting was organized in Trinity College Dublin on November 7, with the aim of bringing together researchers involved in work that combines both economic history and economic geography. There were an excellent array of submissions, covering a host of topics from factor price convergence across space to the clusters and the spread of new technologies.

The workshop opened with a keynote address from Professor Kevin O’Rourke, Chicele Professor Economic History at Oxford. His talk, based on work undertaken with Alan Fernihough (Queens, who was also in attendance), was entitled ‘Coal and the European Industrial Revolution’. The research traces the link between coal and population growth in 19^th Century, exploiting in particular a geological instrumental variable.

After a coffee break, the first session, entitled ‘Market Integration & Regional Inequality’, began, chaired by Rowena Gray (UC Merced). Kristoffer Collin, a graduate student from the University of Gothenburg, presented a paper entitled ‘Convergence in real regional wages for manufacturing workers in Sweden, 1860–1990’, part of a broader stream of work on Swedish cliometrics taking place at Gothenburg. Next up was Alfonso Diez-Minguela, from Universitat de València, whose presentation explored the potential impact of agglomeration on regional growth in Spain, during the period 1870-1930.

The third presentation was by Alexis Wegerich, a DPhil student from Oxford University, who presented work on integration – or lack thereof – in the global market for bunker coal, during the period 1840-1960. The final presentation before lunch was by Michael Pammer, of Johannes Kepler University, who used an administrative dataset to explore the contours of inequality in Imperial Austria in 1911.

After lunch, the second session, Alan Fernihough (Queens University Belfast) chaired a session entitled ‘The Economics of Land and War’. The first presentation was by Ronan Lyons (of Trinity College Dublin), who presented a new housing price index for Dublin over the period 1900-2014. He was followed by Jørgen Burchardt, of the National Museum of Science and Technology (Denmark), whose talked was entitled ‘When industry and homes moved to cheap land’.

The third presentation in the session was by Matthias Blum (Queen's University Belfast), who discussed research on Protestant and Catholic welfare during the First World War and how it may support Max Weber’s hypothesis. The final talk in the second session was by Thilo Huning, a graduate student at Humboldt-Universität zu Berlin, whose paper was titled ‘How Britain Unified Germany - Geography and the rise of Prussia after 1815’. A coffee break followed, after which the final session began, entitled ‘New Frontiers of Economic History’ and chaired by Matthias Blum, of Queens. The first paper was by Harry Kitsikopoulos, of NYU, who presented on the factors affecting the diffusion of Newcomen engines, 1706-1773. Karol Borowiecki, of the University of Southern Denmark, then presented research on well-being indices for three famous composers, based on their letters, and the link between their well-being and their creativity.

The penultimate presentation of the day was given by Katalin Buzasi, a graduate student from Utrecht University, whose talk was titled ‘The long-term determinants of language development in Sub-Saharan Africa’. Formal proceedings concluded with a presentation by Fabian Wahl, a graduate student from Hohenheim University, who looked at the relationship between participative political institutions and city development in the millennium following 800AD. After such a busy day, the group enjoyed a conference dinner. This followed by some sampling of the Friday night-life in Dublin!

Overall, it was fantastic to be able to bring together such a diverse group, working on a variety of interesting projects but with a common belief: that, when understanding economic outcomes, both time and location matter. Hopefully, the relationships started here will help in the submission of panels at economics and economic history conferences, as well as perhaps some direct collaboration.

FRESH meeting on Ancient Economy and Early Economic Developments

A FRESH meeting was organized in Esbjerg October 1-2 to bring together researchers in Ancient History and Economic History to share research and exchange interdisciplinary ideas. The economists and ancient historians who took part in the workshop are explicitly interested in collaborating across disciplines. Their papers covered a wide spectrum of topics and approaches and provide a comprehensive overview of the different strands of research done in ‘economics and ancient history’, with the intent of bridging the gap between humanities and social science research in Ancient history and long run development.

Carl-Hampus Lyttkens (Lund Univ) gave the first day’s keynote lecture

The first day began with three presentations by Ancient historians that nicely set the stage for highlighting the differences in research scope and methodology, and the similarities in the research goals. Gregor Utz (Regensburg Univ) discussed the challenges of using pottery fragments in assessing trade through the cases of Marseille and Arles in the Later Roman Empire, and the economists in the audience wondered about the possibility of using truncation and censoring models to assist in estimating figures. Vincent Gabrielsen (Univ. of Copenhagen) gave a lively talk about the role of the Hellenistic benefactor in state finances, discussing an evolution in state dependence on individual wealth that spoke to modern issues of regulatory capture and the dynamics of political power and wealth, as financing varied from direct taxation (rare) to money lending or even Ponzi schemes. Roland Oetjen (Kiel Univ), co-organizer, talked about the ways in which we can perceive of euergetism (private provision of public goods or ‘good works’) as credible commitments of political investment. These two papers fit nicely together, using economic concepts in carefully detailed ways to elaborate on human behavior in Ancient Greece.

Carl-Hampus Lyttkens (Lund Univ) gave the first day’s keynote lecture which showed how applying economic principles can help elucidate even the behavior of specific individuals in Ancient Greece. He applied a rational actor framework to Pericles’ behavior regarding his rival Kimon, essentially tracing out Pericles’ response function to Kimon’s successes. George Tridimas (Ulster) then also used game theory to discuss the fall of Athenian democracy. His intriguing model differentiates between rich and poor in their expected returns from warfare and shows how the impetus for too much war, leading to demise, stemmed from the poorer factions.

Markus Sehlmeyer on the formation of the Bosporan Kingdom

Returning to ancient history, Markus Sehlmeyer (Marburg Univ) very nicely discussed the formation of the Bosporan Kingdom using collective action theory, making another nice bridge between economics and Ancient history.

The day concluded with PhD students Joshua Günther and Felix Hahn (Kiel) also discussing individual rational actors Kleisthenes and Kleomenes. In their ongoing research, they are considering their behavior in light of principle-agent problems.

The first days’ conversations extensively worked to share information about the application of economic models and the ways in which economic thought and modeling can augment research in Ancient history, as well as its limitations in generalizing.

A lovely dinner, sponsored by SDU Department of Environmental and Business Economics, with lively conversation followed at Gammelhavn.

The second day had greater focus on long run development issues from an economic standpoint. Ezgi Kurt (Bogazici Univ) presented on the roles of military technology and resource endowments in long run economic growth in Eurasia. She has collected data on dynasties and their longevity to examine political instability and growth.

Tønnes Bekker-Nielsen (SDU Odense) gave a fascinating presentation on Roman road design that brought together GIS, engineering, economics, and an understanding of the limitations of these in the contemporary period to examine the evolving efficiency of Roman road design in minimizing the distance cost (physical effort) of those using the roads by minimizing elevation change. This would have matched nicely with Carl-Johan Dalgaard’s (Univ. of Copenhagen) planned keynote talk on Roman roads and long term economic development, but last minute considerations led him instead to give a more polished presentation on comparative development along North-South lines. His story aims to establish that the turnaround in development, which at earliest periods is located in warmer climes, but then moves away from the equator, is tied to quality investments in child-rearing based on thermal requirements for weaning. Thought-provoking indeed!

The discussion of long run growth continued with Fabian Wahl (Hohenheim) presenting on city development and participative political institutions from 800-1800. This work provided interesting contrast to Kurt’s earlier paper and the two authors defended their positions with gusto. After lunch, Anastasia Litina (Luxemborg) also tackled long run growth issues, looking in to geographical conditions of early state formation. This work dovetailed nicely with the previous day’s presentation on collective action and state formation, and the two authors, along with many other participants, shared ideas on how to incorporate more of each other’s fields into their works.

Anastasia Litina (Luxemborg) discussing the geographical conditions of early state formation

The final two presentations shared a focus on resource use and economic development. The first, by Georg Schwesinger (Univ. of Bremen), outlined a new research project seeking to develop bio-economic models of economic development and collapse in the Ancient world. The second, by co-organizer Brooks Kaiser (SDU Esbjerg), investigated the long-standing questions about the timber supply for the extensive Athenian navy in the Classical period using theories from institutional economics and resource economics.

The meeting concluded with a desire to continue the interdisciplinary dialogue in future workshops.

This blog post was written by Brooks Kaiser, Professor WSR at the Department of Environmental and Business Economics at University of Southern Denmark and co-organizer of the FRESH meeting.

Effects of Agricultural Productivity Shocks on Female Labor Supply: Evidence from the Boll Weevil Plague in the US South

New EHES working paper

Manifested in historical accounts, songs, and family tales, the boll weevil (Anthonomus grandis), an approximately one-fourth inch long beetle with a very long snout, is considered as the most well-known agricultural pest in the American South. 

Anthonomus grandis

Arriving near Brownsville, Texas, from Mexico in 1892, the boll weevil started to impair the main economic engine of the South: cotton production. Depending on prevailing wind and weather conditions, the boll weevil could cover from 40 to 160 miles a year such that thirty years after its arrival the whole Cotton Belt was almost completely infested. 

Map showing spread of boll weevil 1892 to 1922

The recent EHES working paper by Ager, Brückner and Herz (2014) focuses on the Cotton Belt counties of the American South that were infested by the boll weevil during the late 19th and early 20th centuries. As the boll weevil adversely affected cotton production and hence the demand for labor, the authors exploit the arrival of the boll weevil as agricultural productivity shock to identify the response of labor supply to changes in labor income. The central message of Ager, Brückner and Herz's article is that labor income shocks had a significant effect on labor supply at the extensive margin in the United States during the 1880-1940 period. For a panel of 903 counties the authors estimate that a one percent increase in labor income increased the labor force participation rate by around 0.2 percentage points. The finding is based on an instrumental variables approach that carefully addresses endogeneity issues.

The instrumental variables approach exploits that in the beginning of the 1890s, counties located in the Cotton Belt of the American South were hit by an agricultural plague, the boll weevil, that adversely affected cotton production and hence the demand for labor. The impact of the boll weevil on output per worker varied across US counties depending on the initial importance of cotton production in a particular county. Counties with a greater initial cotton share experienced a significantly larger drop in output per worker due to the incidence of the boll weevil. Ager et al. therefore use the interaction between the incidence of the boll weevil and counties' 1880 cotton share as an instrument for labor income.

It is notable that instrumental variables estimates of labor supply are significantly larger than those produced by least squares regressions. An explanation for the larger two-stage least squares estimates is a reverse causal effect, which downward biases the least squares estimates. The negative reverse causal effect arises in the least squares regressions because increases in labor supply decrease output per worker as well as wages (under the standard assumption of decreasing returns to scale in labor).

Ager et al. also explore alternative adjustment mechanisms to the labor income shock. They find that there were significant effects on immigration and emigration, as well as on non-market labor. Decreases in output per worker due to the boll weevil lead to significant decreases in immigration, significant increases in emigration, and significant increases in the share of housekeepers.

This blog post was written by Philipp Ager, assistant professor of Economics at University of Southern Denmark, Markus  Brückner,  Associate Professor at the National University of Singapore and  Benedikt Herz, PhD student in Economics at Universitat Pompeu Fabra.

The working paper can be downloaded here. http://www.ehes.org/EHES%2068.pdf