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My paper with Louis Rouanet on how ethnogenesis (i.e., the formation of new cultural and ethnic groups) can serve as a means of producing governance in situations of weak states or statelessness in order to allow exchange to take place has now been published. It is available at the European Journal of Law and Economics. The link is here and the article’s abstract is below:

The process of ethnogenesis (i.e., the formation of new ethnic groups) is here considered equivalent to the production of “governance goods” in situations where the state is weak or absent. In these cases, the process of ethnogenesis is a response to (1) the problem of social distance between heterogeneous groups which functions as a barrier to trade, and (2) the problem of providing public goods. As an investment in governance, ethnogenesis reduces the costs of trading and cooperating, and expands the scope for specialization. We rely on two examples of peaceful and productive relations between First Nations and European settlers in Canada between the early seventeenth and mid-nineteenth centuries to support our hypothesis. The emergence of “hybrid” cultural groups and identities fostered peaceful relations and facilitated trade in borderland areas in which state rule was virtually nonexistent. It also permitted these new groups to provide key collective goods within their own communities. This, in turn, facilitated international trade (especially in furs). Both of our examples suggest that cultural processes can be endogenous responses aimed at the production of governance.

Yesterday, Gabriel Zucman was announced as the recipient of the 2023 Bates Clark Medal. As a comment on this, I will refer to my Economic Journal article with Phil Magness, John Moore and Phil Schlosser. In this article, my co-authors and I replicated the work of Piketty and Saez (2003) in the Quarterly Journal of Economics and found that they did multiple errors, ignored key sources and made serious misunderstandings of the source materials before 1960 . When we corrected their series, we found major differences between their published series that present a strongly different version of the evolution of American income inequality. The main takeaway graph is below and as can be seen — their level is off and the trends are different (theirs show WW2 and tax policies during the war as leveling — ours show the great depression as the great leveller — something we confirmed in another article in Economic Inquiry on why the IRS data is horrible at getting inequality right).

The reason why this matters is that the vast majority of Zucman’s work builds off the 2003 paper (notably with how they poorly create denominators for total income) by Piketty and Saez. They have never updated that work and Zucman just keeps repeating it. As a result, I admit that I consider most of Zucman’s inequality work (both as a solo author or with Piketty and Saez) as highly dubious because he and they keep treating the data with little care as showed in both our articles.

Maybe we can commend the interest in inequality and the commitment to the question, but there is little else that warrants commendation.

This paper has been a work in progress since 2016 and it has just been accepted and published online at the Journal of Development Economics. It is co-authored with two close friends (Vadim Kufenko of the University of Hohenheim and Alex Arsenault Morin of Queen’s University). It argues that weak coercive labor regime can be as detrimental to development as more coercive regimes. We apply this to the case of colonial Quebec using a unique institution known as seigneurial tenure which created localized monopsonists. The effect was heavily depressed wages in those areas with that unique institution.

The abstract is below and the paper can be accessed here (free and ungated until June 13 2023):

Can mild forms of labor coercion generate welfare effects as large as more extreme forms? Do these effects persist over time? To answer both questions, we use Quebec’s system of seigneurial tenure (in effect until 1854) that granted landlords market power in the establishment of factories, and restricted worker mobility. This created a mild form of labor coercion as landlords had incentives to reduce employment and wage rates. To measure these effects, we rely on the Constitutional Act of 1791 which stated that all new lands had to be settled under a different tenure system. Using a regression discontinuity design, we find that seigneurial tenure significantly depressed wages. The effect on wages is as large, or larger than, causal estimates of significantly more coercive labor regimes. We also find that by 1871, seventeen years after the institution’s abolition, these effects had fully dissipated, suggesting that persistence is not an issue.

I have a new working paper available. It is co-authored with Sean P. Alvarez and Macy Scheck (both of the awesome Political Economic Research Institute at Middle Tennessee State University). In the paper, we use revised GDP data that correct for the lies that dictators tell about their economies. We show that this biases the estimated relationship between economic freedom and economic development. We conclude that the generally used GDP data forces us to strongly underestimate the importance of economic freedom to development.

The paper is here on SSRN and the abstract is below:

The literature connecting economic freedom indexes to income levels and growth generally points in the direction of a positive association. In this paper, we argue that this finding is a highly conservative as the data is heavily biased against finding any effects. The bias emerges as a result of the tendency of dictatorial regimes to overstate their GDP level. Dictatorships also tend to have lower scores of economic freedom. This downwardly biases any estimations of the relation between income and economic freedom. In this paper, we use recent corrections to GDP numbers — based on nighttime light intensity — to estimate the bias. We find that the true effects of economic freedom at its component on income levels are between 1.1 and 1.33 times greater than commonly estimated. For economic growth, the bias is far smaller and only appears to be relevant for some individual components such as size of government and property rights.

A few days ago, Justin Callais (University of Louisiana at Lafayette) and I received news that our paper on lighthouses in Antebellum America has been accepted at the European Economic Review. The abstract is below and the paper can be accessed here:

The study of the lighthouse features prominently in debates over the private provision of public services. However, little attention has been devoted to how lighthouse systems operated once governments took charge of its production. We exploit the fact that Antebellum America came close to the ideal textbook solution to providing public goods and we assess how the government allocated lighthouses before the Civil War. We find some evidence that the lighthouses were built according to commercial needs. However, we discover stronger evidence that political considerations played a role in selecting where lighthouses would be built.