Author Archives: missiaia

On the many failures of (southern) Italy to catch up

Regional income inequality in Italy in the long run (1871–2001). Patterns and determinants

by

Emanuele FELICE (claudioemanuele.felice@uab.cat) Departament d’Economia i d’Història Econòmica, Universitat Autònoma de Barcelona

ABSTRACT

The chapter presents up-to-date estimates of Italy’s regional GDP, with the present borders, in ten-year benchmarks from 1871 to 2001, and proposes a new interpretative hypothesis based on long-lasting socio-institutional differences. The inverted U-shape of income inequality is confirmed: rising divergence until the midtwentieth century, then convergence. However, the latter was limited to the centrenorth: Italy was divided into three parts by the time regional inequality peaked, in 1951, and appears to have been split into two halves by 2001. As a consequence of the falling back of the south, from 1871 to 2001 we record s-divergence across Italy’s regions, i.e. an increase in dispersion, and sluggish ß-convergence. Geographical factors and the market size played a minor role: against them are both the evidence that most of the differences in GDP are due to employment rather than to productivity and the observed GDP patterns of many regions. The gradual converging of regional GDPs towards two equilibria instead follows social and institutional differences – in the political and economic institutions and in the levels of human and social capital – which originated in pre-unification states and did not die (but in part even increased) in postunification Italy.

URL:  http://d.repec.org/n?u=RePEc:aub:uhewps:2013_08&r=his

Review by Anna Missiaia

This paper was distributed by NEP-HIS on 2013-12-29. The author, Emanuele Felice, engages  with the mother of all research questions in the economic history of post-Unification Italy, which is “why did the south fall behind?”. The large and widening economic gap between the north and south of Italy remains one of the “big topics” in Italian economic history and one upon which consensus is far from being reached. The paper by Felice aims at providing both new quantitative data to assess this gap and a discussion on what caused and, equally important, what did not cause the formation and persistence of the north/south divide. 

Emanuele Felice

Emanuele Felice

Let us start with the quantitative assessment. Felice provides new estimates of regional GDP at present borders. Given the long-run perspective adopted, it is necessary to make sure that we are comparing the same regions through time. This is not straightforward for Italy as it experienced several changes in its borders between 1871 and 2001. Felice collected detailed data from foreign (mostly Austrian) sources on territories that eventually become part of northern Italy. This data enables him to produce regional GDP per capita estimates for 10 year benchmarks from 1871 to 2001.

Felice then measures convergence and divergence across regions. The bottom line is that Italian regions diverged during most of the period under study. This divergence exacerbated the most between World War I (WWI) and the late 1950s. Then during the so called “Economic Miracle” of the 1960s, Italian regions experienced a degree of convergence. This convergence took place during a period of very high economic growth in the north and Felice attributed this convergence to the heavy subsidising of the southern economy. Felice also observes that while the south failed to catch up with the rich north, the northeast and centre succeeded in the task, reaching similar GDP per capita levels to those of the original Industrial Triangle towards the end of the 20th century. 

After the number crunching, Felice moves on to tackle the determinants of the income inequality. Following the path of a debate almost as old as Italy, he focuses on some well known hypothesis. The first one is that the south had a geographical disadvantage either in terms of factor endowment or market access. Felice discards the first hypothesis noting that differences between the north and south were not as marked and that the macro-areas were more different within than between them. Are a result the endowment argument is not a good candidate to explain the north-south divide. On market access, Felice notes that the south had a fairly high access to markets in the period before WWI compared to the north and the situation reversed gradually. Also, after WWI regions with a quite low access to markets (Trentino Alto-Adige and Valle d’Aosta) managed to reach high levels of GDP and regions in the south with a good access to markets performed poorly in GDP growth. 

Trentino Alto-Adig

After excluding geographical factors, Felice discusses the human element to explain divergence. He looks at human capital, social capital and institutions. At the time of unification, the south was lagging behind in both human and social capital (for a more detailed discussion and some numbers see Felice (2012)). Felice’s thesis is that economic development in the south was highly affected by its low human capital until WWII. In spite of the catch up in literacy rates after WWII, measures of social capital show that the south has never reached the level of the north. The persistence of the gap has therefore to be attributed to persistence of low levels of social capital that allowed the consolidation of poor institutional settings as well as the flourishing of organized crime.  

Reading Felice’s paper, one’s impression is that the author managed to convey several years of quantitative research into a nice narrative on how the south fell behind. He uses a mix of hard data and qualitative reasoning to guide the reader through. In particular, he takes timing of turning points (i.e in market access, state intervention or catch up in literacy rates) to explain how different elements could or could not explain the divide. He also uses the case of the northeastern regions to explain how path dependence can be overcome (the northeast had very low levels of human capital at the time of unification but managed to catch up with the rest of the north).  

For the Italian readers, Emanuele Felice, 2014, "Perche' il Sud e' rimasto indietro", Il Mulino, Bologna.

For the Italian readers, Emanuele Felice, 2014, “Perche’ il Sud e’ rimasto indietro”, Il Mulino, Bologna.

To conclude, it is often the case that this narrative argues that the south was not disadvantaged in all the factors and that different periods were driving economic growth in the country. However, it seems like it was advantaged in a given factor of growth only when that factor was not important. For example, it had a good market access before WWII, when human capital was more important; it had cough up in terms of human capital after WWII but at that time social capital started being more important. The picture that emerges from this work is that the south suffered from a mix of poor starting conditions, bad timing and unfortunate development strategies that trapped it into the gap that we still observe today.

 

References

Emanuele Felice, 2012. Regional convergence in Italy, 1891–2001: testing human and social capital, Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(3), pages 267-306, October.

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Industrial Location and Path Dependency during the British Industrial Revolution

The Location of the UK Cotton Textiles Industry in 1838: a Quantitative Analysis

by

Nicholas CRAFTS (n.crafts@warwick.ac.uk)  University of Warwick

Nikolaus WOLF (nikolaus.wolf@wiwi.hu-berlin.de) Humboldt University

ABSTRACT

We examine the geography of cotton textiles in Britain in 1838 to test claims about why the industry came to be so heavily concentrated in Lancashire. Our analysis considers both first and second nature aspects of geography including the availability of water power, humidity, coal prices, market access and sunk costs. We show that some of these characteristics have substantial explanatory power. Moreover, we exploit the change from water to steam power to show that the persistent effect of first nature characteristics on industry location can be explained by a combination of sunk costs and agglomeration effects.

URL:  http://econpapers.repec.org/paper/heswpaper/0045.htm

Review by Anna Missiaia

This paper was distributed by NEP-HIS on 2013-09-13. Nick Crafts and Nikolaus Wolf, who have both provided significant contributions to the literature on industrial location, engage here in the analysis of the UK cotton textile industry. In particular cotton production during the Industrial Revolution was heavily concentrated in Lancashire, the region just north of Manchester. Moreover, this concentration persisted over the 19th century. The two authors are therefore interested in explaining both the original concentration and its persistence throughout time.

The paper presents a solid statistical work. The dataset comprises 1823 cotton mills and covers 148 locations in all of the UK. To explain the employment in textiles across these locations, the authors use information on coal prices, geography, climate and access to markets. All these measures are specific to each location and region fixed effects are included to avoid the omitted variable bias. Firms are assumed to be profit maximizers in their location decisions. The factors that influence the location decisions are considered into two broad groups: the “first nature” characteristics, which are considered exogenous to earlier location choices (i.e. climate) and the “second nature” characteristics which are endogenous (i.e. access to markets). Crafts and Wolf separate these two elements because they are interested in identifying the case of location choices that eventually modify the characteristic of the location itself (in particular market access).

They reckon that access to market can be so important that the cotton industry remained in a location in spite of higher variable costs because these were outweighed by better access to markets. Another way in which past choices can affect current choices is through sunk costs: once an investment in energy production was made in one location, it could hardly be moved to another location. However, it could often be adapted to new technology. The example provided is the switch from water to steam power, during which waterwheels were adapted to steam. This allowed some location that at that point did not have a fist nature advantage, to maintain their industries through path dependence.

hibbert-cotton-machines

Hibert, Platt & Son’s cotton machines.  Illustrated London News, 23 August 1851. 

On the empirical side, the paper uses a Poisson model to estimate the expected number of cotton mills and employed persons for each location as a function of the characteristics of the locations. The main findings are that water power production and number of patents registered increase the likelihood of location; coal prices had a surprisingly weak effect; agglomeration forces had a positive effect on the number of persons employed but a negative effect of the average size of the mills, suggesting that cotton industry was organized in a network of small specialized mills. This is confirmed by anecdotal evidence on Lancashire’s cotton industry. The authors also provide several robustness checks on their data to support their claims.

The paper then moves on to discussing why Lancashire achieved such a high concentration of cotton industries. The two authors explain that the high concentration was the result of a combination of first and second nature geography. To prove this statistically, Crafts and Wolf perform a counterfactual analysis in which they replace each characteristic with the average value of the UK and then impose a 10% change in the variables to compare their effect individually. Doing so, they come up with a “conversion table” that tells us what variation of the x variable is needed to offset a 10% variation of the y variable. The main results are that the location choices were driven both by first nature characteristics such as water power and second nature characteristics such as market access. The persistence of the location is liked to sunk costs and agglomeration economies, which allow some regions to maintain their industries in spite of the original advantage being vanished.

textile

An image of the Lewis Textile Museum in Blackburn, Lancashire.

To conclude, the contributions of this paper are several. First, it makes for the first time use of statistical techniques to explain the location of cotton industries, which were crucial during the British Industrial revolution. Doing so, it contributes to the wider debate about the determinants of the location of industries in general, proposing a methodology based on counterfactuals which allows to compare the relative strenghts of the different factors. Finally, the paper adresses the always ‘hot issue’ of path dependency in location choices, which is faced by any researcher in this particular field. The next step in the research, to which we look forward,  will be to estimate the model as a panel in order to cast more light on the persistence of location through time.

Internal Migration and Trade Unions Strength: an Alternative Look on Pre-Civil War Spain

Structural change, collective action, and social unrest in 1930s Spain

by

Jordi DOMÈNECH FELIU (jdomenec@clio.uc3m.es)  Universidad Carlos III

Thomas Jeffrey MILEY (thomas.j.miley@gmail.com) University of Cambridge

ABSTRACT

The Spanish 2nd Republic (1931-1936) witnessed one of the fastest and deepest processes of popular mobilization in interwar Europe, generating a decisive reactionary wave that brought the country to the Civil War (1936-1939). We show in the paper that both contemporary comment and part of the historiography makes generalizations about the behaviour of the working classes in the period that stress idealistic, re-distributive and even religious motives to join movements of protest. In some other cases, state repression, poverty, and deteriorating living standards have been singled out as the main determinants of participation. This paper uses collective action theory to argue that key institutional changes and structural changes in labour markets were crucial to understand a significant part of the explosive popular mobilization of the period. We argue first that, before the second Republic, temporary migrants had been the main structural limitation against the stabilization of unions and collective bargaining in agricultural labour markets and in several service and industrial sectors. We then show how several industries underwent important structural changes since the late 1910s which stabilized part of the labour force and allowed for union growth and collective bargaining. In agricultural labour markets or in markets in which unskilled temporary workers could not be excluded, unions benefitted from republican legislation restricting temporary migrations and, as a consequence, rural unions saw large gains membership and participation. Historical narratives that focus on state repression or on changes in living standards to explain collective action and social conflict in Spain before the Civil War are incomplete without a consideration of the role of structural changes in labour markets from 1914 to 1931.

URL: http://e-archivo.uc3m.es/bitstream/10016/17160/1/wh1305.pdf

Review by Anna Missiaia

This paper was distributed by NEP-HIS on 2013-06-30. The authors, Jordi Domenech from Carlos III and Thomas Miley from Cambridge, aim to explain why and how workers’ protests rose in Spain during the Second Republic (1931-1936). This question is very interesting from a historiographical point of view, as this period of popular mobilization is considered to be one of the causes of the subsequent Civil War (1936-1939). Standard explanations include state repression, poor economic conditions, economic inequality and possibly the flourishing of socialist ideologies in Spain. The authors detach from these standard explanations and follow an institutional approach. They claim that a significant part of this social process can be attributed to changes in the labour markets. In particular, that increasing mobilization was due to a decrease of temporal migrations in labour markets.

Republique-allegorie-2

Spanish Republic Allegory displaying Republican paraphernalia and symbols of modernity

The conceptual argument underpinning their effort is roughly as follows: collective action theory contends that the greater the diversity of workers’ preferences (for example over their type of contract or their work conditions), the lesser the workers will be able to organize effectively. These preferences also include decisions to enter labour contracts. For instance, temporary workers accept to be paid pro-rata (i.e. by unit of output) while permanent workers accept (or prefer) to be paid by hour of in-the-job labour.

Domenech and Miley remind us that at in the first third of the 20th century, Spain characterized by substantial internal migrations that enabled the rise of temporary workers within manufacturing and agriculture. However, in the early 1930s Spain experienced changes in both the markets for its products and the demand for labour. These changes led to the introduction of legal limitations over temporary migrations. The result of regulatory innovations was the strengthening of unions by increasing their membership and also as union leaders increasingly faced more homogeneous requests by they represented workers and all this, therefore, led to greater social mobilization.

Wall painting during the Spanish Civil War

To prove their point, Domenech and Miley make a remarkable use of qualitative evidence which, let me emphasize, is not always easy to find. They collected oral testimonies, reports and newspaper articles to show the increasing tension between permanent and temporary workers. The work on original qualitative sources is vast and necessary to fill the gap left by quantitative estimates. In fact, to my surprise, this paper does not propose any formal model or empirical test on quantitative data. The reason is well explained on page 29, where the authors point out that census data would not cover this period: the relevant laws that imposed restrictions were passed just after the 1930 census and abrogated before the next census of 1940. The fact that census data are not of any use for this work is surely a severe limitation to any attempt to study the causality between migrations, union power and social unrest. However, looking at the extensive sources used for the qualitative analysis, the impression is that a further step to at least quantify the changing role of unions could be taken. Possibly,  a measure of union power (for example by number of strikes, number of members, etc) could be proposed. At the same time, conceptual framework is not all together clear, particularly when dealing with specific relationships leading to the increase of union power. For instance, poor economic conditions and greater income inequality have been proposed as causing of popular unrest and social mobilization. It is not clear why greater union power rather than the changes in labour regulation could have also been a contributing force.

Comisiones Obreras (one of the main Spanish unions – circa 1970s)

To conclude, this paper proposes an innovative explanation to social unrest in Spain in the 1930s based on labour markets and provides comprehensive qualitative evidence. This is a very important topic in light of the subsequent events: popular mobilization has been followed by four years of civil war and the beginning of Franco’s dictatorship. In spite of the severe restrictions on the data, some further quantification (even just descriptive) would improve a paper which casts light on such an fundamental period of Spanish history.

Patents, Super Patents and Innovation at Regional Level

Related Variety, Unrelated Variety and Technological Breakthroughs: An analysis of U.S. state-level patenting

By Carolina Castaldi  (c.castaldi@tue.nl), School of Innovation Sciences, Eindhoven University of Technology

Koen Frenken, (k.frenken@tue.nl) School of Innovation Sciences, Eindhoven University of Technology

Bart Los, (b.los@rug.nl), Groningen Growth and Development Centre

URL: http://econpapers.repec.org/paper/eguwpaper/1302.htm

Abstract

We investigate how variety affects the innovation output of a region. Borrowing arguments from theories of recombinant innovation, we expect that related variety will enhance innovation as related technologies are more easily recombined into a new technology. However, we also expect that unrelated variety enhances technological breakthroughs, since radical innovation often stems from connecting previously unrelated technologies opening up whole new functionalities and applications. Using patent data for US states in the period 1977-1999 and associated citation data, we find evidence for both hypotheses. Our study thus sheds a new and critical light on the related-variety hypothesis in economic geography.

Review by Anna Missiaia

This paper by Carolina Castaldi, Koen Frenken and Bart Los was distributed by NEP-HIS on 30-03-2013. The paper is not, strictly speaking, an economic or business history paper. However, it provides some very interesting insights on how technological innovation and technological breakthroughs happen. This is a large and expanding field in economic history and on-going research on the economics of innovation, I believe, can be of interest to many of our readers.

Professor Butts and the Self-Operating Napkin: The “Self-Operating Napkin” is activated when the soup spoon (A) is raised to mouth, pulling string (B) and thereby jerking ladle (C) which throws cracker (D) past parrot (E). Parrot jumps after cracker and perch (F) tilts, upsetting seeds (G) into pail (H). Extra weight in pail pulls cord (I), which opens and lights automatic cigar lighter (J), setting off skyrocket (K) which causes sickle (L) to cut string (M) and allow pendulum with attached napkin to swing back and forth, thereby wiping chin. (Rube Goldberg, 1918).

The paper is concerned with the study of how innovation in a region is affected by the connections within its sectors in terms of shared technological competences. The term “variety” conveys this concept. The authors differentiate in two types of variety: related and unrelated variety. The former describes the connection among sectors that are complementary in terms on competences and can easily exchange technological knowledge. Unrelated variety, on the other hand, steams from sectors that do not appear to have complementary technology.

These two different types of variety are useful to distinguish for their effects on innovation. Related variety supports productivity and employment growth at regional level. However, unrelated variety is the one that causes technological breakthroughs, as it brings a completely new type of technology into a sector. In a subsequent stage, unrelated variety becomes related, being absorbed by the new sector.

The paper keeps these two types of variety separate and tests for their effects. The authors use patent data for US states in the period 1977-1999. The methodology implies regressing the number of patents as a proxy for innovation, on measures of related variety, unrelated variety, research and development investment, time trend and state fixed effects.  Variety is measured by looking at the dispersion of the classification of patents within and between technological classes of the patents. The paper also proposes two different regressions, one using the total number of patents as dependent variable and one using the share of superstar patents, which represent patents that lead to breakthrough technologies. Superstar patents are distinguished from “regular” patents according to the distribution of their citations: superstar patents have a fat tail, meaning that they are cited more in later stages of their development compared to regular patents.

A nice contribution of this paper is to measure super patents through their statistical distribution of their citations instead of relying on superimposed criteria such as being on the top 1% or 5% of the citations. The idea here is to distinguish between general innovation (regular patents) and breakthrough innovation (superstar patents). Theory predicts that regular patents will be positively affected by related variety, producing general innovation, while superstar patents will be positively correlated with unrelated variety, producing breakthrough innovation. The empirical analysis nicely confirms the theory.

Technological progress is said to resemble a flight of stairs

The possible shortcomings of the paper are related to the role of geography in the analysis. The sample is at US state level and the underlying implication is that variety in the state affects the number of patents registered in it. There could be, under this assumptions, some issues of spatial dependence. The authors touch upon this point in two parts of the paper: in the methodology section they explain that superstar patents tend to cluster in fewer states that general patents and this pattern requires a different approach for the two types of patents. It would be useful if this issue could be elaborated further by the authors in a future version of the paper.

As for the possible spatial dependence effect among explanatory variables, the authors try to control for the fact that R&D in one state could affect the patent output of neighboring states as well. They construct an adjacency matrix to capture the effect of the R&D effort of neighboring states.

The conclusion is that the analysis is robust to spatial dependence. In spite of this robustness check for spatial dependence, some concerns remain. Restricting the R&D effect only to neighboring states could be a limit, as the effect could not only go through physical proximity, but also through other types of connections: for example, the same firm could have different branches in different non-adjacent states, leading to an influence not captured by the adjacency matrix.

In short, this paper provides a very interesting insight on how two types of innovations can arise as measured by patent citations at regional level. The results are consistent with the theory and could be useful to future research in historical perspective. A further improvement of the paper could be to conduct more robustness check on the geographical aspects of these results, especially expanding them to non-adjacent states.

Images of the future technology – The Jetsons, 1962

To Get Published or Not to Get Published: Challenges and Opportunities in Economics from 1970 to Present.

Nine Facts about Top Journals in Economics

David Card (University of California, Berkeley) (card@econ.berkeley.edu)

Stefano della Vigna (University of California, Berkeley) (sdellavi@econ.berkeley.edu)

Abstract

How has publishing in top economics journals changed since 1970? Using a data set that combines information on all articles published in the top-5 journals from 1970 to 2012 with their Google Scholar citations, we identify nine key trends. First, annual submissions to the top-5 journals nearly doubled from 1990 to 2012. Second, the total number of articles published in these journals actually declined from 400 per year in the late 1970s to 300 per year most recently. As a result, the acceptance rate has fallen from 15% to 6%, with potential implications for the career progression of young scholars. Third, one journal, the American Economic Review, now accounts for 40% of top-5 publications, up from 25% in the 1970s. Fourth, recently published papers are on average 3 times longer than they were in the 1970s, contributing to the relative shortage of journal space. Fifth, the number of authors per paper has increased from 1.3 in 1970 to 2.3 in 2012, partly offsetting the fall in the number of articles per year. Sixth, citations for top-5 publications are high: among papers published in the late 1990s, the median number of Google Scholar citations is 200. Seventh, the ranking of journals by citations has remained relatively stable, with the notable exception of the Quarterly Journal of Economics, which climbed from fourth place to first place over the past three decades. Eighth, citation counts are significantly higher for longer papers and those written by more co-authors. Ninth, although the fraction of articles from different fields published in the top-5 has remained relatively stable, there are important cohort trends in the citations received by papers from different fields, with rising citations to more recent papers in Development and International, and declining citations to recent papers in Econometrics and Theory.

Keywords: Publications, Top-5 Journals, Economics

URL http://www.nber.org/papers/w18665.pdf

Review by Anna Missiaia

This working paper was distributed by nep-his on 2013-01-12 and contains some information that might be of use to academics engaged in economics related disciplines. In particular, it should be read by young and mid-career academics whose future is still highly dependent on the number of their publications and the ranking of the journals where they publish. This survey by David Card and Stefano della Vigna, both from the Department of Economics of UC Barkeley, provides several facts and comments about articles published in top economics journals from 1970 to today.

The paper considers the top-5 economics journals, namely the American Economic Review (AER), Econometrica (EMA), the Journal of Political Economy (JPE), the Quarterly Journal of Economics (QJE), and the Review of Economic Studies (RES). All the articles published between 1970 and 2012 have been tracked looking at the number of authors, the length of the article and the number of citations. The number of submissions to each journal from 1990 onwards has been collected as well in order to compute acceptance rates.  The first two facts that emerge from this article are that the number of submissions per year almost doubled between 1990 and 2012 and that of articles published declined from 400per year to 300 per year. These first two facts will appear particularly grim to those who are in the early stages of their academic career, as they boil down to a decrease of acceptance rate from 16% to 6% today. However, this tendency is contrasted by a rise of the average number of co-authors from 1.3 to 2.3 in the same period. Finally, the length of the articles has increased three-fold from 1970 to today.

David Card – Class of 1950 Professor of Economics (UC Berkeley)

These first three facts are worth to be analysed together. It is the opinion of card and Della Vigna that the increase of the number of co-authors is a response to the more restrictive policy by journals on publication. The reason for teaming-up is that publications with one or multiple authors have the same weight in terms of career. Therefore, if acceptance rate decreased, the number of papers authored by each scholar has decreased less than that. The dramatic increase of the length of articles is interpreted by the authors as an improvement in the quality of research, which is due to both more selectivity and to joint work of scholars. Moving to the citations front, the readers will be glad to hear that whenever they will manage to get published on a top-5 journal,  this will make them extremely popular, although it will take a while. Papers published today have a lower number of citations compared to the ones published in the in the 1990s, which reminds us that it takes years to accumulate citations. However, if you compare the papers published in the 1970s to those of the 1990s, they have fewer citations. This is probably  a sign of the quality increase in papers that we have seen from the 1990s onwards. The ranking of journals in terms of citations has been fairly stable over the past decades, suggestion a sort of stickiness in the relative reputation of journals (the notable exception is the QJE that climbed four positions and became first). The last fact to report is that the number of citations depends on the field: more empirical fields (Development and International Economics) tend to have more citations from recent papers while more theoretical fields (Econometrics and Economic Theory) still have more citations from older papers.

Stefano Dellavigna – Professor of Economics (UC Berkley)

In conclusion, this survey on publications on the top-5 journals in economics tells us that publishing has become tougher,  it requires higher quality of the papers, longer papers and collaboration among scholars to pass the harsh judgements of referees and editors of these journals. However, the glory received from the publication in terms of citations and career seems to be worth the suffering.

The Mixed Blessings of Clio

The Cliometric Voice

Claude Diebolt (Bureau d’Économie Théorique et Appliquée (BETA), Université de Strasbourg) (cdiebolt@unistra.fr)

URL: http://ideas.repec.org/p/afc/wpaper/12-12.html

No abstract

Review by Anna Missiaia

Distributed by NEP-HIS on 2012-10-20, this is a short, dense, methodology paper by Claude Diebolt, the editor of the journal Cliometrica, tackles a well known issue among economic historians: the role of quantitative research in economic history (cliometrics) and its relationship with both history and economics. The so-called Cliometric Revolution has now come of age, having started in the 1960s with the work of Robert Fogel. It is safe to say that it has now conquered its space in the field. Diebolt offers us a retrospective of the field, and his vision of its future. The (sometimes harsh) debate is focused on the usefulness and validity of applying economic/econometric tools to the study of the past. He provides a lot of food for thought in this sense.

The paper’s main point is to highlight the usefulness of counterfactual analysis in history. The first example of this line of research that Diebolt discusses is the genre-defining work of Fogel (1964), reviewed here by Lance Davis over on EH.net. I think that Diebolt’s emphasis on counterfactual analysis is somewhat surprising; the shortcomings of this type of approach are now well known (see Leunig, 2010), and cliometric research today encompasses many other types of analysis that are as fruitful, from institutional analysis, to labour history, and historical economic geography.

I welcome Diebolt’s call for a shift in the economic history discipline at large from the “understanding side” to the “explaining side”. This implies that (quantitative) research should not limit itself to the description of historical phenomena, but also to the study of causal relationships.

Vermeer’s “The Art of Painting” (late 1660s), depicting a woman dressed as Clio, the muse of history.

The second part of the paper is devoted to the positioning of cliometrics with respect to both history and economics. Diebolt states that cliometrics is first and foremost a branch of history. It uses economic tools to provide historical answers, but it is not a mere application of economic models to the past. However, Diebolt recognises that cliometric research might also be seen as an auxiliary discipline with respect to economics. This last statement needs a clarification before the detractors of cliometrics start sharpening their weapons. The message here is that economic history could be a tool for economic theory building, not simply as a provider of empirical evidence for its models, but as a source of inspiration to theory. Ideally, there should be a mutual relationship in which cliometricians absorb from economists the latest theoretical and econometric advances, and economists get insights and ideas from the rigorous study of the past. Diebolt pushes the discussion forward, claiming that economic history could in future become a “full-fledged field of economic theory”.

Of the three main arguments about the “branding” of cliometrics, Diebolt’s mission to sell cliometrics as a field of economic theory seems to me the hardest. It is a difficult task to believe that cliometrics is, or ever will be, able to hold its role as a historical tool alongside the creation of a sort of unified theory of economic history. That aside, it would mean a reversal in the logic in what drives cliometric research. If cliometrics is meant to be part of history, as supported by the author, economic theory is just a mere tool used to provide possible answers to historical questions. Conversely, when history is used to prove the validity of an economic model, cliometrics becomes merely applied economics. I believe that the survival of the distinction between cliometrics as part of historical research and applied economics is most likely to be crucial for its future.

References
  • Fogel R., “Railroads and American Economic Growth: Essays in Econometric History”, The Johns Hopkins University Press, Baltimore, 1964.
  • Leunig, T., “Social Savings”, Journal of Economic Surveys, Vol.24 (2010), pp.775-800

Human Resources in Great Britain in the Long Run, 1871-2011

Population, Migration and Labour Supply: Great Britain 1871 – 2011

Timothy J. Hatton (Australian National University) (tim.hatton@anu.edu.au)

URL http://d.repec.org/n?u=RePEc:auu:hpaper:004&r=his

Abstract
A country’s most important asset is its people. This paper outlines the development of Britain’s human resources since the middle of the 19th century. It focuses on four key elements. The first is the demographic transition – the processes through which birth rates and death rates fell, leading to a slowdown in population growth. The second is the geographical reallocation of population through migration. This includes emigration and immigration as well as migration within Britain. The third issue is labour supply: the proportion of the population participating in the labour market and the amount and type of labour supplied. Related to this, the last part of the chapter charts the growth in education and skills of the population and the labour force.

Review by Anna Missiaia

This work by Tim Hatton was distributed by NEP-HIS on 2012-07-29 and deals with the evolution of population, labour force and human capital in Britain over the last 140 years. It is part of the upcoming third edition of the Cambridge Economic History of Modern Britain edited by Roderick Floud, Paul Johnson and Jane Humphries. The author of this paper is one of the most known scholars when it comes to British labour history. The paper neatly illustrates the main trends in the evolution of human capital in Britain in the long run.

The first trend is the one of population. British population tripled over this period, predominately due to the increase in the number of the over 60 population. The reduction in deaths was due to the reduction in infectious diseases.  This change in the age structure is typical of demographic transitions experienced by industrializing countries. Nowadays, the main cause of death is chronic conditions that are also responsible of the increased number of years spent in disability. As for the fertility transition, Hatton claims that it was not caused by the decrease in infant mortality (and therefore the need to have fewer children in order to ensure support in old age). On the contrary, Hatton claims that a shift in preferences for smaller and better off family took place and was enabled by more awareness of birth control.

The second trend is the shift of Britain from an emigration to an immigration country. Emigration was in general connected to fluctuations in the business cycle abroad and the author estimates that the without emigration, real wages would have been about 12% lower. The reversal took place in the 1980s due to a mix of changes in institutional factors and economic incentives. Countries such as the US, Canada and Australia abolished the preference for British migrants and Britain facilitated the migration of Commonwealth citizens.

As for the condition of the labour force, the participation of women increased and the one of people over 65 decreased. There are two hypotheses on why women stayed out of the labour market until the 1930s: economic choice or social norms hostile to women labour. In the first case the decrease in the number of children to take care of should have led to an increase in participation, which did not occur for a long time after the beginning of the fertility transition. According to Hatton, women empowerment led to the overcoming of social norms. In general, the number of hours worked decreased from 60 per week to 36 from the 1980s on. This was possible because of the increase in real wages that allowed workers to work fewer hours.

Finally, education became universal through the expansion of public schooling and higher education (especially in professional subjects). For women, the attainment of a higher level of education was functional to the larger participation in the labour force. In conclusion, this paper gives an excellent overview on different topics in British labour history. It connects the different dimensions (population, labour force, migration, schooling) within one framework and proposes the author’s view on several debated issues.