Research

We study rainmaking as an instrumental religious belief. We present a model in which a religious leader tries to persuade people to believe. Praying for rain can persuade only where the hazard of rainfall during a dry spell is increasing over time, so that prayer is most likely to succeed when people most want rain. We present evidence from prayers for rain in Murcia, Spain, where the hazard rate is increasing, that the church’s prayers for rain predict rainfall over two centuries. To generalize this finding, we gather an original data set of whether ethnic groups around the world traditionally prayed for rain. We find that ethnic groups facing an increasing rainfall hazard are 47% more likely to pray for rain, consistent with our model’s prediction that societies are more likely to pray for rain where prayer is persuasive.

We investigate the efficiency of a market relative to a non-market institution—an auction relative to a quota—as allocation mechanisms in the presence of frictions. We use data from water markets in southeastern Spain and explore a specific change in the institutions to allocate water. On the one hand, frictions arose because poor farmers were liquidity constrained. On the other hand, farmers who were part of the wealthy elite were not liquidity constrained. We estimate a structural dynamic demand model by taking advantage of the fact that water demand for both types of farmers is determined by the technological constraint imposed by the crop’s production function. This approach allows us to differentiate liquidity constraints from unobserved heterogeneity. We show that the institutional change from an auction to a quota increased total efficiency for the farmers considered. Welfare increased by 23.4 real pesetas per farmer per tree, a 6 % increase in total production relative to the market.

The diffusion of computerized machine tools in the mid-20th century was a pivotal step in the century-long process of factory automation. We build a novel measure of exposure to computer numerical control (CNC) using initial variation in tool types across industries and differential shifts toward CNC by type. Industries more exposed to CNC from 1970–2007 increased labor productivity and reduced production employment. Workers in more exposed labor markets adjusted by shifting from metal to non-metal manufacturing. Union members were shielded from this job loss, and some workers returned to school to retrain.

We provide the first nationally representative long-run series (1870–2020) of incarceration rates for immigrants and the US-born. As a group, immigrants have had lower incarceration rates than the US-born for 150 years. Moreover, relative to the US-born, immigrants’ incarceration rates have declined since 1960: immigrants today are 60 percent less likely to be incarcerated (30 percent relative to US-born Whites). This relative decline occurred among immigrants from all regions and cannot be explained by changes in observable characteristics or immigration policy. Instead, the decline is part of a broader divergence of outcomes between less-educated immigrants and their US-born counterparts.

We quantify the effects of the political development cycle – the fluctuations between the left (Maoist) and the right (pragmatist) development policies – on growth and structural transformation of China in 1953-1978. The left policies prioritized structural transformation towards non-agricultural production and consumption at the cost of agricultural development. The right policies prioritized agricultural consumption through slower structural transformation. The imperfect implementation of these policies led to large welfare costs of the political development cycle in a distorted economy undergoing a structural change.

This paper studies the role of private sector companies in the development of local amenities. We use evidence from one of the largest multinationals of the 20th century: the United Fruit Company (UFCo). The firm was given a large land concession in Costa Rica—one of the so‐called “Banana Republics”—from 1899 to 1984. Using administrative census data with census‐block geo‐references from 1973 to 2011, we implement a geographic regression discontinuity design that exploits a land assignment that is orthogonal to our outcomes of interest. We find that the firm had a positive and persistent effect on living standards. Company documents explain that a key concern at the time was to attract and maintain a sizable workforce, which induced the firm to invest heavily in local amenities—like the development of education and health infrastructure—that can account for our result. Consistent with this mechanism, we show, empirically and through a proposed model, that the firm's investment efforts increase with worker mobility.

We provide evidence of the role of community networks in emergence of Indian entrepreneurship in early stages of cotton and jute textile industries in the late 19th and early 20th century respectively, overcoming lack of market institutions and government support. From business registers, we construct a yearly panel dataset of entrepreneurs in these two industries. We find no evidence that entry was related to prior upstream trading experience or price shocks. Firm directors exhibited a high degree of clustering of entrepreneurs by community. Consistent with a model of network-based dynamics, the stock of incumbent entrepreneurs of different communities diverged non-linearly, controlling for year and community fixed effects.

We posit that autocrats introduce local elections when their bureaucratic capacity is low. Local elections exploit citizens' informational advantage in keeping local officials accountable, but they also weaken vertical control. As bureaucratic capacity increases, the autocrat limits the role of elected bodies to regain vertical control. We argue that these insights can explain the introduction of village elections in rural China and the subsequent erosion of village autonomy years later. We construct a novel dataset to document political reforms, policy outcomes, and de facto power for almost four decades. We find that the introduction of elections improves popular policies and weakens unpopular ones. Increases in regional government resources lead to loss of village autonomy, but less so in remote villages. These patterns are consistent with an organizational view of local elections within autocracies.

Virtually all theories of economic growth predict a positive relationship between population size and productivity. In this paper, I study a particular historical episode to provide direct evidence for the empirical relevance of such scale effects. In the aftermath of the Second World War, 8 million ethnic Germans were expelled from their domiciles in Eastern Europe and transferred to West Germany. This inflow increased the German population by almost 20%. Using variation across counties, I show that the settlement of refugees had large and persistent effects on the size of the local population, manufacturing employment, and income per capita. These findings are quantitatively consistent with an idea‐based model of spatial growth if population mobility is subject to frictions and productivity spillovers occur locally. The estimated model implies that the refugee settlement increased aggregate income per capita by about 12% after 25 years and triggered a process of industrialization in rural areas.

The recent economic history of global integration has been characterized by a dismantling of capital controls and increased foreign direct investment (FDI). This paper explores the role of impediments to international capital mobility, foreign direct investment, and technology diffusion in shaping Latin American economic growth. First, the paper summarizes and quantifies the effects of the Bretton Woods international financial system in Latin America. Then, I study the consequences of capital controls—and their dismantling—on FDI and trade-induced technological advancements and their role in shaping local development, especially in the 1990s after the implementation of several trade liberalization policies.

We use data from marriage records in Murcia, Spain, in the eighteenth century to study the role of women in social mobility in the pre-modern era. Our measure of social standing is identification as a don or doña, an honorific denoting high, though not necessarily noble, status. We show that this measure, which is acquired over the lifecycle, shows gendered transmission patterns. In particular, same-sex transmission is stronger than opposite-sex, for both sons and daughters. The relative transmission from fathers versus mothers varies over the lifecycle, and grandparents may affect the status of their grandchildren.