Forthcoming – Adjusting inequalities for regional price parities: importance and implications

I have received news that another of my article has been accepted. This time the acceptance is from the Journal of Regional Analysis & Policy and the paper was co-authored with my dear friend Youcef Msaid. We make a simple argument regarding inequality. All incomes are aggregated in distributional measurements using either no price deflators (nominal incomes) or national deflators (when there is a need to track centiles over time). We argue that this is an error as there are intra-national price disparities that suggest the need to use intranational deflators to create purchasing power parity.

This correction has two effects. The first is modest: it reduces the level of inequality nationwide by 0.5%. The second is more important. It changes the spatial distribution of where the bottom 10% is located. Uncorrected figures have poorer states overrepresented in the bottom decile, while corrected figures have much of that decile living in urban areas in NY and CA. There are policy-relevant implications. The first is that inequality-combatting policies may need to be better calibrated to target the true bottom of the income distribution. The second is that the “reallocation” of the bottom fractile goes largely to states where the housing is expensive and its supply is inelastic. This suggests that economists and policy-makers who emphasize the need to ease supply restrictions to help the cities become more affordable to the poorest may be onto something.

A table is attached below for the first key result. The rest will be available upon publication. The working paper is available hereTable1RPP

 

 

Predation, Seigneurial Tenure and Development in French Colonial America

I have a new working paper (single-authored) that I have just submitted. It concerns one of the many facets of the colonial institution of seigneurial tenure (which existed for Canada from the 17th century to 1854) that contributed in slowing down economic growth and depressing income levels. More precisely, I argue that the institution was the equivalent of a predatory state. The paper is available here on SSRN and the abstract is below:

This paper argues that significant transfers from peasants to landlords through private taxes and duties under seigneurial law in the French colonies in North America in the eighteenth century have been underestimated. They represented a burden equal to 5.19% to 6.89% of income. This high taxation burden – which was not converted into public goods – created a supply-side impediment to economic growth

Forthcoming – A Price Index for Canada, 1688 to 1850

A few days ago, I received goods news that the Canadian Journal of Economics had accepted my paper that constructed a consumer price index for Canada between 1688 and 1850 from homogeneous sources (the account books of religious congregations). I have to format the article to the guidelines of the journal and attach all my data and it will be good to go (I am planning on doing this over the weekend or maybe early next week). The abstract is below and I also join two of the graphics contained in the article so that my key results can be gleaned at:

This paper presents the first price index for any region of Canada that spans from the colonial era to the mid-19th century. I constructed it using prices from the account books of religious congregations with estates throughout modern-day Quebec. It represents a substantial improvement over previous indexes thanks to the consistent price quotations in the source material, the high frequency of observations for many goods, the vast number of goods and the inclusion of numerous non-agricultural and non-food goods. Its price trends differ mildly from those of existing but less-comprehensive price indexes. I link this new index with post-1850 indexes to create a 328-year price index for Canada.

Figure 1

Figure2

Forthcoming – Cuban Infant Mortality and Longevity: Health Care or Repression?

I have received news that a short article submitted to Health Policy & Planning has been accepted for publication. In the article, I argue that the statistics regarding Cuba’s health care are distorted by the incentives generated by the target system under which physicians must operate (at the threat of penalties). To meet their targets, they re-categorize early neonatal deaths as late fetal deaths so as to not swell the infant mortality rate. They also pressure women into having abortions (sometimes, they are coerced) if they feel that a risky pregnancy might endanger the achievement of the centrally-fixed targets. I show that this lead to a mild overestimation of the level of life expectancy at birth (between 0.22 and 1.79 years).

In addition, non-health related policies help explain a large share of the outcomes. Notably, restrictions on car ownership have made Cuba one of the country with the lowest ratio of deaths in accidents to population. This is important because in countries like Brazil, which has 8 times the car ownership rate of Cuba, traffic accidents are estimated to reduce male life expectancy at birth by 0.8 years.

Overall, me and my co-authors (Ben Powell and Gilbert Berdine) posit the possibility that Cuba’s much-lauded health outcomes result in large part from heavy-handed coercive measures that distort incentives and from non-health related coercive policies. In essence, we are arguing that the wheat cannot be separated from the chaff. The “bads” (the regime’s coerciveness) cannot be disentangled from the “goods”.

Colonial Military Garrisons as Labor-Market Shocks: Quebec City and Boston, 1760- 1775

I have a new paper (co-authored with Jeremy Land) that has recently been submitted for consideration. Jeremy and I argue that the military occupation of Boston in 1768 should be viewed as a labor market shock that would have fueled revolutionary fervor. We highlight that it is the combination of an increased supply of labor and the mandatory quartering of troops (which acts as a tax which mitigates any demand effect that the influx of troops might have had) that did the trick for reducing real wages. We compare with Quebec City at the same time which had a similar shock in 1760 when the British conquered the colony from the French. However, unlike Boston, the garrison was gradually reduced and real wages increased.  The abstract is below and I will provide an update when (or if – fingers crossed) the paper is accepted:

The military occupation of Boston in 1768 shocked the city’s labor market. The
soldiers, who were expected to supplement their pay by working for local businesses, constituted an influx equal to 12.5 percent of greater Boston’s population. To assess the importance of this shock, we use the case of Quebec City, which experienced the reverse process (i.e., a reduction in the British military presence from close to 18 percent of the region’s population to less than 1 percent). We argue that, in Boston, the combination of the large influx of soldiers and a heavy tax on the local population in the form of the billeting system caused an important wage reduction while the lighter billeting system of Quebec City and the winding down of the garrison pushed wages up. We tie these experiences to political developments in the 1770s.

Does size matter? Implications of household size for economic growth and convergence

I have another working paper that has just been submitted for consideration. This time, it is co-authored with Vadim Kufenko and Klaus Prettner (see our previous paper in Economics Bulletin here and our working paper on History-Augmented Growth Models here). We argue that the study of convergence is impaired by the absence of corrections in variance changes in household size. As household size relates economies of scale in consumption, it has relevance to the measurement of living standards. The abstract of the paper is below:

We assess the effects of changes in household size on the long-run evolution of
living standards and on cross-country convergence. When the observed changes in
average household size across countries are taken into consideration, growth in living standards is slower throughout the 20th century as compared to a measure based on per capita GDP. Furthermore, the speed of divergence between different countries before 1950 is faster and the speed of convergence after 1950 is slower after adjusting for the evolution in household size.

The Lightship in Economics?

I have recently submitted a new paper for consideration. It is co-authored with Rosolino Candela (post-doctoral fellow at Brown University). We revisit the debate launched by Ronald Coase in 1974 with the publication of the lighthouse in economics by introducing the lightship. This is because we believe that the field has been too focused on the lighthouse as a public good without considering the wider market for naval security. This is why we introduce primary evidence about the lightship (seamarks at sea, especially efficient on riverways like the Thames). We argue that it highlights that private provision was possible by that it was crowded-out by Trinity House (i.e. the state mandated monopoly on seamarks). We have not put the paper online for the time being, but below is the abstract of the paper we submitted:

What role does government play in the provision of public goods? Economists have used the lighthouse as an empirical example to illustrate the extent to which the private provision of public goods is possible. This inquiry, however, has neglected the private provision of lightships. We investigate the private operation of the world’s first modern lightship, established in 1731 on the banks of the Thames estuary going in and out of London. First, we show that the Nore lightship was able to operate profitably and without government enforcement in the collection of payment for lighting services. Second, we show how private efforts to build lightships were crowded out by Trinity House, the public authority responsible for the maintaining and establishing lighthouses in England and Wales. By including lightships into the broader lighthouse market, we argue that the provision of lighting services exemplifies not a market failure, but a government failure.