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Announcements The second referee report is due March 29th at 5pm - - PowerPoint PPT Presentation

Oct 15, 2022 163 likes •605 views

Announcements The second referee report is due March 29th at 5pm The empirical project is due April 14th at 5pm J. Parman (College of William & Mary) Global Economic History, Spring 2017 March 27, 2017 1 / 44 Final Set of Readings Clark

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Announcements

The second referee report is due March 29th at 5pm The empirical project is due April 14th at 5pm

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 1 / 44

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Final Set of Readings

Clark (2008) “A Farewell to Alms” Chapter 13 Bleakley (2007) “Disease and Development: Evidence from Hookworm Eradication in the American South” Goldin and Katz (1998) “The Origins of Technology-skill Complementarity” Long and Ferrie (2013) “Intergenerational Occupational Mobility in Great Britain and the United States since 1850”

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 2 / 44

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Trade, Institutions and Ethnic Tolerance

FIGURE 2. Medieval Legacies: Religious Composition and Hindu-Muslim Riots

Note: The pattern of modern religious demography mimics patterns of Muslim rule, medieval trade, and political patronage. Medieval ports and major Muslim patronage centers (such as those that housed mints) continued to have greater Muslim populations relative to nearby areas in 1931. Medieval ports, however, experience fewer religious riots relative to towns nearby.

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 3 / 44

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Trade, Institutions and Ethnic Tolerance

When do we get ethnic tolerance? Nonlocals and locals should produce complementary goods or services If they produced substitute goods, strong locals would force weak nonlocals out of town (ethnic violence) The nonlocals’ contributions should be hard to cheaply replicate The nonlocals’ resources should be hard to violently seize There need to be mechanisms that redistribute surplus between groups to reduce incentive to violently expropriate How do Muslim traders satisfy these conditions?

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 4 / 44

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Trade, Institutions and Ethnic Tolerance

There were Islam-specific advantages to trade across the Indian Ocean

Pilgrimages to Mecca coordinated the development of the world’s largest textile market during the Hajj

Muslim advantages in oceanic trade were hard to steal

  • r replicate

Trade networks enjoy increasing returns to scale Oceanic trade can’t be split into short segments and replicated by a local

There was a natural, decentralized mechanism for the redistribution of surplus to locals

It was easy for any Muslim to enter into the Indian Ocean trade (unlike kin-based trade networks) Intra-Muslim competition would drive prices down for locals

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 5 / 44

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Trade, Institutions and Ethnic Tolerance

Jha draws on a wide range of data to test his theories (historical texts on trade patterns, geographic data, datasets on ethnic violence, surveys on modern attitudes, etc.) I want to focus on a couple of pieces of geographical data The basic thing that Jha needs to test is whether areas that gave rise to the right kinds of trade end up having lower levels of ethnic violence A key thing to look at would be areas that are medieval ports But there are a couple of problems of endogeneity Why were particular ports chosen? What if there are other unobserved variables correlated with international trade?

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 6 / 44

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Trade, Institutions and Ethnic Tolerance

The first issue in Jha’s words: A second potential concern...is that Muslim traders may have chosen to trade at geographically similar ports for unobservable reasons, such as having a local population with a proclivity for peace independently of trade. Solution: don’t look at which towns did become ports, look at which towns had the right geography to be a port

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 7 / 44

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Trade, Institutions and Ethnic Tolerance

Jha identifies medieval natural harbors through the following steps:

Use a 2001 atlas to identify water bodies within 10km

  • f the modern Indian coastline

If those bodies intersected the coast in a the medieval period, they would have produced inlets or sheltered harbors Towns within 10km of those water bodies are defined as potential harbors

These potential harbors provide an instrument for the actual harbors

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 8 / 44

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Trade, Institutions and Ethnic Tolerance

The second issue is trickier unless there is an exogenous force shutting off trade to certain ports randomly Good news, there is Jha notes that coast itself has moved over time due to the effects of monsoon season Certain ports that were active harbors in medieval times have become inaccessible to shipping due to silting This gives Jha natural variation in the viability of trade within a town over time

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 9 / 44

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Trade, Institutions and Ethnic Tolerance

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 10 / 44

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Trade, Institutions and Ethnic Tolerance

So after all of this work, what does Jha find? Medieval ports were five times less prone to Hindu-Muslim riots between 1850 and 1960 (two centuries after Europeans disrupted Muslim overseas trade dominance) Medieval ports remained half as prone to Hindu-Muslim riots between 1950 and 1995 Evidence from surveys suggest greater trust today for Muslims in medieval port towns than non-port towns (evidence is actually based on attitudes toward the polio vaccine) Medieval port residents today are more likely to be members of business groups and trade unions and join credit and savings groups Lots of parallels to the institutions papers we’ve studied

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 11 / 44

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Portage and Path Dependence

One takeaway from Jha is that geography influenced medieval trade which in turn influenced institutions and modern outcomes Bleakley and Lin are exploring a similar pathway, thinking about how geography determined the center of economic activity They are interested in what happens when those geographical advantages disappear, much like Jha’s use

  • f silting

Let’s let Bleakley and Lin set things up in their own words:

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 12 / 44

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Portage and Path Dependence

Why is economic activity distributed unevenly across space? Is the distribution of population determined uniquely by natural endowments, or does path dependence have a role even in the long run? Separating these two effects can be challenging, in part because the features that first brought people to an area (such as topography, resources, climate, etc.) are usually persistent, thus confounding attempts to attribute the spatial distribution of activity to path dependence.

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 13 / 44

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Portage and Path Dependence

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 14 / 44

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Portage and Path Dependence

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 15 / 44

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Portage and Path Dependence

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 16 / 44

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Portage and Path Dependence

FIGURE IV Fall-Line Cities from North Carolina to New Jersey

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 17 / 44

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Portage and Path Dependence

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 18 / 44

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Portage and Path Dependence

Bleakley and Lin use the fall line as a source of a geographical advantage that disappeared So it gave cities their start but then ceased to help them once railroads came through What happens to cities when the fall line ceases to be relevant? Quick answer: Richmond is still standing They interpret these results as evidence of path dependence and increasing returns to scale in local economic activity Think about the relevance to our discussion of the work

  • f Diamond and Pomeranz
  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 19 / 44

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Clark and A Farewell to Alms

We have taken a look at several theories of economic development and the Industrial Revolution Institutions: North, Thomas and others suggest that getting the right institutions is fundamental to economic growth The institutions story can be told either as exogenous or endogenous change in institutions Pomeranz: the advantage of resources (Britain having access to coal and the New World) Diamond: geography and ecology, countries with good environments get a head start Nunn, Acemoglu, Johnson, Robinson, Jha: geography and institutions

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 20 / 44

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Clark and A Farewell to Alms

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 21 / 44

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Clark’s Critique of Institutions Story

What’s unsatisfactory with an exogenous institutional change story:

No sign of improvement in the appropriability of knowledge until Industrial Revolution is well under way Institutions aren’t really exogenous

What’s unsatisfactory with an endogenous institutional change story:

Means that what is important is what changes institutions, not the institutions themselves There is no path dependence from institutional history Even if you start with inefficient institutions, they will be subverted and refashioned (examples include wager

  • f battle, interest rates)
  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 22 / 44

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Clark’s Critique of Institutions Story

Inventor Invention Result John Kay flying shuttle Impoverished by litigation to enforce patent, house attacked by machine breakers, fled to France and died in poverty James Hargreaves spinning jenny Difficulty enforcing patent, forced to flee by machine breakers Richard Arkwright water frame Died wealthy but had trouble enforcing (and keeping) patents Samuel Crompton mule Did not patent invention, did receive an award from parliament but never saw big success Edmund Cartwright power loom Mill repossessed by creditors, factory burned by machine breakers Eli Whitney cotton gin Costly litigation to enforce patent, near bankruptcy Richard Roberts self-acting mule In financial trouble by end of career Gains from Innovation During the Industrial Revolution

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 23 / 44

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Clark’s Critique of Institutions Story

Depiction of a judicial duel, Hans Talhoffer, 1459

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 24 / 44

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Clark’s Critique of Institutions Story

Ashford v. Thornton, 1818 “Not guilty, and I am ready to defend the same with my life.”

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 25 / 44

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Clark’s Critique of Multiple Equilibrium Story

What about being stuck in an bad equilibrium in terms

  • f institutions?

Argument is that if a ruler has enough power, they can maintain bad institutions that are personally profitable Doesn’t explain why England in the 19th century and not some other society May not explain why a ruler with that much power wouldn’t promote growth (and keep the rewards)

What about being stuck in a bad human capital equilibrium?

Argument is that there was a switch from a bad, low human capital state to a good, high human capital state Not clear what would motivate the switch before the Industrial Revolution Big demographic transition occurred after onset of Industrial Revolution

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 26 / 44

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Clark’s Critique of Pomeranz

Pomeranz assumes that markets and incentives are sufficient for rapid economic growth Pomeranz acknowledges that China had extensive markets and well-defined property rights, so he assumes the problem was an external constraint (geography) Clark says it can’t just be the market and incentives but a change in how people responded to market incentives An important difference between England and China was how the mindsets of people were changing, something Pomeranz doesn’t compare

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 27 / 44

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Motivating Clark’s Explanation of the Industrial Revolution

In terms of institutions, technology, markets, etc. China and Japan looked like they were following similar paths to England Switch focus from institutional differences and geographical differences to differences in the population Look for differences in how populations and social characteristics evolved leading up to the Industrial Revolution Specifically, look at the spread of education and of certain traits in the population that promote economic growth

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 28 / 44

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Differences in Social Evolution

Measuring social evolution: interest rates, level of education Interest rates were low in England compared to in Asia In 1760, secured loans had interest rates around 15% in Japan and around 5% in England Literacy and numeracy were lower in Asia than in England Clark takes these observations as evidence that England was further along in terms of social evolution than Asia, even if Asian societies were moving in the same direction

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 29 / 44

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Where does this evidence on the education of society come from?

Not much data out there measuring actual education level Can find crude measures of literacy and numeracy which serve as proxies for education Still problems with measuring literacy and numeracy Indirect evidence comes from the kinds of documents that survive and how many documents survive Look at things like how well people could report their ages, whether they could sign their name

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 30 / 44

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Age Heaping

Age heaping occurs when people round to ages ending in zero or five when estimating their ages. If everyone reported age correctly, 20 percent of the population would report an age ending in a zero or five. If everyone rounded, 100 percent would report an age ending in a zero or five (20 percent of these people would get lucky and actually be correct). H = 5 4 (X − 20) When X = 20, H = 0 and when X = 100, H = 100.

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 31 / 44

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Age Heaping

An alternative measure is the Whipple Index (George Whipple, 1866-1924) Focuses on the population between ages 23 and 62 Pop0,5 is the number of people with an age ending in 0

  • r 5

Popall is the total population W = 500 · Pop0,5 Popall W = 100 when 20 percent have an age ending in 0 or 5 W = 500 when 100 percent have an age ending in 0 or 5

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 32 / 44

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Age Heaping and Illiteracy

Figure 6. Age heaping and illiteracy in three U.S. censuses

5 1 1 5 2 2 5 3 Age heapin 20 40 60 80 100 Illiteracy white black foreign Fitted values

From Hearn, Baten and Crayen, age heaping is measured using the Whipple index, an observation is a state-census year

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 33 / 44

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Age Heaping in the Long Run

Location Date Type Group Heaping England 1350 Both Rich 61 Florence, Italy 1427 Urban All 32 Florentine territory 1427 Rural All 53 Corfe Castle, England 1790 Urban All 8 Corfe Castle, England 1796 Urban Poor 14 Ardleigh, England 1796 Rural All 30 Terling, England 1801 Rural Poor 19 Cotton operatives, England 1833 Both Workers 6 Age Heaping Over Time

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 34 / 44

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Age Heaping in the Long Run

Figure 7. Age heaping in the long run

100 200 300 400 300 1300 1400 1500 1600 1700 1800 1900 Italy Germany France Alps Russia United States

From Hearn, Baten and Crayen, age heaping is measured using the Whipple index

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 35 / 44

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Age Heaping by Region

From Crayen and Baten, age heaping is measured using the Whipple index

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 36 / 44

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Issues with Age Heaping

Big advantage of age heaping is that we only need to

  • bserve a cross-section of ages, we don’t need multiple
  • bservations per person

Not (at all) a perfect proxy for literacy or education All sorts of reasons to misreport age (may want to seem younger, may want to seem older, etc.) People may not care about age or reporting it accurately Person recording age might not care about recording it accurately

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 37 / 44

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Measuring Literacy Rates

Can look at volume of records as an indication of

  • verall literacy rates (Clark compares England and India
  • n this basis)

Can look at the number of people that can sign or read various types of documents:

Percentage of grooms who signed the marriage register Percentage of witnesses who signed their depositions Percentage of witnesses who signed ecclesiastical court declarations Number of people who could read a passage of the Bible (to get out of secular court)

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 38 / 44

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Literacy Over Time

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 39 / 44

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Literacy Over Time

Japanese men, 1868 Japanese women, 1868

1 2 3 4

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 40 / 44

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Literacy Now

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 41 / 44

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Literacy by Income

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 42 / 44

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Interest Rates Over Time

Country Period Interest Rate Babylonia 500 BC 16-20 Greece 100 BC 10 Rome 200 9-12 India 800 15 England 1200-1349 9.5 Germany 1200-1349 10.7 Italy 1200-1349 10.7 Japan 1600 15 England 1600 5-6 England 1750 4-5 Interest Rates Over Time and Place

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 43 / 44

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Interest Rates Over Time

r = ρ + d + ψgy ρ: time preference rate d: default risk premium ψgy: expected annual growth in income

  • J. Parman (College of William & Mary)

Global Economic History, Spring 2017 March 27, 2017 44 / 44