New working paper: Economic Freedom Matters A Lot More for Economic Development Than You Think!

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.


Now accepted: The Political Economy of Lighthouses in Antebellum AmericaNow accepted:

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.

Now online: The incubated revolution: Education, cohort effects, and the linguistic wage gap in Quebec during the 20th century

I have a new paper that is now online. It is published by the Journal of Economic Behavior & Organization and is co-authored with my old friends (more than a decade-long friendship) Maripier Isabelle and Julien Gagnon. Link is here and abstract is here:

Wage gaps between various groups within economies are common and policy solutions to attenuate them can have different distributional effects within groups. We propose a model to think about how, when labour is relatively immobile but capital isn’t, an economy with initial wage gaps between different groups can transition toward greater equality. We apply this framework to the French-English linguistic wage gap in Quebec (Canada) between 1970 and 2000 by looking at birth cohorts from 1910 to 1970. Our findings are consistent with our model: the closing of the wage gap was caused by a change, during the 1940s in compulsory schooling which shocked the initial equilibrium and led to cohort-specific dynamics.

There is also an op-ed I wrote for the American Institute for Economic Research summarizing the importance of this paper.

New Working paper: Commons and Weak States: The Case of the Gaspesian Fisheries in the 19th century

I have a new working paper, co-authored with a family member, on the governance of commons (i.e., open-access resources) in situations of weak states/statelessness. The paper studies a strange monopoly on fishing in the Gaspesian peninsula of Quebec (Canada) during the 1820s-1840s. The paper is here on SSRN and the abstract is below:

The inefficiencies of common property fisheries are well-known to economists. To avoid over-exploitation, they propose multiple forms of government solutions like taxes, quotas and the enforcement of property rights regimes designed to avoid over-harvesting. However, can there be efficient arrangements under statelessness or in the presence of weak states? One such example is the Gaspesian Peninsula (in the Canadian province of Quebec) during the first half of the 19th century. There, a single firm (the Charles Robin Company) came to dominate the market and it was able to effectively to restrict entry. In this paper, we unveil that it was able to do so by reducing the prices of imported goods that it would give to local fishermen in exchange for a part of their catch. This had the effect of deterring fishermen to contract with other merchants as well as deterring other merchants from entering the market. It also had the effect of making the region, contrary to what historians depict, richer than most regions of Canada at the time. We take this as an example of the ability to deal with commons problems in the presence of weak states.

New working paper: Disease Mix and how Economic Freedom Matters for Health Outcomes

I have a new working paper with Ilia Murtazashvili (University of Pittsburgh) and Kelly Hyde (RAND Corporation) on the topic of how economically free liberal democracies are disadvantaged in dealing with contagious diseases but that they have a strong upper hand in terms of alleviating all other diseases and causes of deaths. On net, we argue that economic freedom and liberal democracy improve outcomes far more than they deteriorate them. Paper is available here at SSRN and the abstract is below:

We investigate the institutional foundations of public health. We argue that a key distinction in analysis of disease is between diseases of commerce (diseases associated with movement of people and with affluence) and diseases of poverty (primarily noncommunicable diseases that depend on wealth and income). We show that the mix of disease – the ratio of communicable diseases and those associated with longevity to diseases of poverty – increases in economically free countries. We argue that increasing burdens of diseases of commerce reflects the quality of institutions, as those diseases are better than living shorter, brutish lives where diseases of poverty claim many lives. This analysis also highlights an institutional trade-off: economically free institutions reduce certain types of disease while contributing to others.