Working Papers

Authors: Florian Ploeckl, Simon C. Holmes

Jan 2012

This study investigates the impact of joint-stock banks on the rationalisation of the British interwar steel industry.  A new panel data set of steel firm characteristics covering 1920 to 1938 is used to document rationalization and bank involvement, including interlocking directorships, with both found to be more extensive than previously thought.  A set of all potential amalgamation pairs is created and used in a logit analysis of the determinants of mergers.  Bank involvement with firms increased the probability that a particular merger occurred.  Furthermore mergers with bank involvement did not increase the involved firm's profitability, while those without did.

JEL Codes: L61, N24, N64

Keywords: Banking, Steel industry, Rationalization, Mergers, Interwar Britain

Reference: 093

Individual View

Authors: Kevin Hjortshøj O'Rourke, Douglas A. Irwin

Nov 2011

This paper provides a historical look at how the multilateral trading system has coped with the challenge of shocks and shifts.  By shocks we mean sudden jolts to the world economy in the form of financial crises and deep recessions, or wars and political conflicts.  By shifts we mean slow-moving, long-term changes in comparative advantage or shifts in the geopolitical equilibrium that force economies to undergo disruptive and potentially painful adjustments.  We conclude that most shocks (financial crises and regional wars) have had relatively little effect on the trade policy, but that shifts pose a greater challenge to the system of open, ultilateral trade.

JEL Codes: F02, F53, N70

Keywords: Trade, Multilateralism, History

Reference: 092

Individual View

The newly dominant interpretation of the British industrial revolution contends that Britain was a high wage economy (HWE) and that the high wages themselves caused industrialization by making profitable labour-saving inventions that were economically inefficient in the context of other relative factor prices.  Once adopted these macro inventions put Britain on a growth path that transcended the trajectories associated with more labour-intensive production methods.  This account of the HWE economy is misleading because it focuses on men and male wages, underestimates the relative caloric needs of women and children and bases its views of living standards on an ahistorical and false household economy.  A more realistic depiction of the working-class family in these times provides an alternative explanation of inventive and innovative activity based on the availability of cheap and amenable female and child labour and thereby a broader interpretation of the industrial revolution.

Reference: 091

Individual View

Authors: Eric B. Schneider

Jul 2011

This paper employs multiple regression analysis to evaluate the effectiveness of yield-raising techniques available to medieval farm managers (reeves) using a panel dataset of 49 manors held by the Bishop of Winchester from 1349-70.  There are three main interesting findings.  First, annual weather variation, modelled with climate reconstruction, was highly significant in explaining annual yield variation in wheat, barley, and oat yields, though the weather influenced each grain differently.  Second, there is evidence that planting leguminous fodder crops and livestock stocking rates had small or even negative effects on grain yields.  Finally, there is indirect evidence that reeves responded to economic incentives in allocating labour inputs such as manuring, weeding, harvesting, and gleaning among their crops, giving them a small ability to adjust their output based on economic incentives.  These findings complicate our understanding of the agricultural revolution.  The ineffectiveness of short-run yield-raising strategies employed in open field agriculture would support Overton's traditional argument of the importance of enclosure for the gains in agricultural productivity.  However, the whispers of price responsiveness on the manors might suggest that open fields were becoming more efficient, supporting Allen's argument that the first agricultural revolution was carried out by small farmers on open fields.

Reference: 090

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Authors: Rui Esteves

Jun 2011

This paper is a first attempt to garner the theory and evidence on the political economy of the first wave of financial liberalisation during the nineteenth and early twentieth century, and of its demise after World War I.  Not everyone gained from the process of globalisation (of trade, labour, and finance), which brought about important changes in the structure of the economy and the distribution of income in nations across the world.  This paper explores how the economic incentives generated by these dislocations translated, through the political system, into choices about openness to foreign capital and financial integration.  The period before World War I is remarkable by the almost absence of restrictions on cross-border capital flows, which may explain the little attention it has received in the historical literature, compared to the extensive study of trade protectionism in this period.  After the War, many countries experimented with capital controls which varied in nature and intensity and were intensified during the Depression.  Despite the attempt made here to reconcile these stylized facts to models of political economy, the analysis requires a better empricial foundation and some suggestions for further research are also proposed.

JEL Codes: F4, G18, N20

Keywords: Political economy, financial liberalisation, capital controls, pre-war

Reference: 089

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Authors: Emanuele Felice

Mar 2011

The article aims to present and discuss estimates of levels of human and social capital in Italy's regions over the long term, i.e. roughly from the second half of the nineteenth century up to the present day.  The results are linked to newly available evidence for regional value added in order to begin to form an explanatory hypothesis of long-term regional inequality in Italy.  More particularly, convergence in value added per capita across Italy's regions is tested (through both cross-section and dynamic panel regressions) in light of the neoclassical exogenous growth approach, which incorporates human capital and social capital as conditioning variables into a long-term production function.  On the whole, the results confirm the importance of conditioning variables, i.e. of regional diffrences in human capital and social capital, but also suggest that their impact significantly changed over the twentieth century, thus supporting the view that, in different periods, conditioning variables are determined by technological regimes.

JEL Codes: E13, E24, N93, N94, R11

Keywords: Regional history, human capital, social capital, convergence

Reference: 088

Individual View

This paper uses data from the 1833 Factory Inquiry to assess male and female occupations and earnings in factory textile production.  This is contrasted with evidence drawn from various sources on male and female employment in domestic industry.  1780-1850 was a period of dramatic change in the nature and location of textile production, with important consequences for women's work.  Whilst economic factors explain some of the changes we see, gender ideology had a powerful effect on how the labour market operated, and this was increasingly the case over this period as the organisation of work became more formalised and hierarchical.

Reference: 087

Individual View

Some scholars have posited that mutual banks have fewer incentives to engage in excessive risk-taking than joint-stock banks because of the unique structure of property rights in the mutual firm.  This paper uses their theory as a framework to explain the divergent risk-taking behavior of building societies between the pre-war and the inter-war periods, and between large and small societies in the latter period.  It is argued in this paper that the low risk-taking behaviour predicted of mutual financial institutions like building societies can only be expected of small regional societies which were less exposed to competition than their larger, city-based counterparts which competed more aggressively for investor funds and mortgage business.  In the inter-war period, increased competition between societies led to levels of risk-taking hitherto unseen in the movement, leading to calls by the movement's leaders to consolidate the sector into the hands of a few large societies.  This process of consolidation promised to benefit members and to improve the overall efficiency of societies in the movement.  The actual experience however shows that these promises were largely unmet.  Rather, it is shown that the only beneficiaries of firm growth were building society managers, who were able to extract higher pay from empire building.

Reference: 086

Individual View

Authors: S. Ryan Johansson

Oct 2010

Medical knowledge - defined broadly to include both its private and public forms - has been the driving force behind the historical transitions that have raised life expectancy in modern Europe.  Advances in knowledge, rather than better nutrition (particularly the escape from caloric insufficiency) deserve greater emphasis because the very first groups to undergo anything recognizable as a secular risk in longevity were the rich and well fed, rather than the poor and chronically malnourished.  At the beginning of the 16th century Europe's ruling elites lacked virtually any reliable information about how best to use their ample material resources to prevent, manage and cure the ill-health that caused so many premature deaths among them.  The advance of medical knowledge and practice accelerated in Western Europe after c. 1500, with a succession of discoveries that were quite useful (as judged by modern standards) in preventing disease, reducing "life-style" risks, managing illness and providing cures for a few debilitating and deadly diseases - severe dysentery, syphilis, malaria, scurvy and, finally, smallpox, being the principal diseases affected.  Yet, access to most of the available innovative medical care remained closely restricted.  Medical expertise was limited and highly priced, and many of the measures prescribed were unaffordable even to town-dwelling middling-income families in environments that exposed them to endemic and epidemic disease.  Along with the poor, they therefore were left at a grave health disadvantage vis-a-vis adult members of the wealthy urban families to whose conditions the doctors were attending.  The London-based ruling families of England in this epoch benefited to an exceptional degree among the European elites from the contemporary progress of medicine.  Their improved chances of survival in adulthood were the major factor raising royal life expectancy at birth (males and females, combined) from 24.7 years for the cohort born during the 1600s to 49.4 years for those born during the 1700s.

Reference: 085

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Authors: Paul David, S. Ryan Johansson, Andrea Pozzi

Aug 2010

This paper details the statistical sources, methods and findings that underpin the demographic evidence offered by Johansson (2010) in support of her thesis regarding "Europe's first knowledge-driven mortality transition", namely the pronounced and sustained rise in the expectations of life that took place among the 17th and early 18th century birth cohorts of members of Britain's royal families.  The consequent interest in exposing the existence of systematic demographic effects of changes in the medical treatments and healthcare regimes received by this elite makes it germane to establish the statistical significance of a particular pattern of inter-cohort changes in the royals' mortality experience - namely, one whose timing and age- and sex-specificity make it plausibly attributable to the historical improvements in the medical knowledge and practice of their doctors, as has been documented by Johansson (1999, 2010).  Complete genealogical data for the members of Britain's royal families born c. 1500 - c. 1800, due to Weir (1996), permits construction of cohort life expectancy at birth and age 25 for royal males, royal females, as well as for the small number of male monarchs, their female consorts and the queens.  Inter-cohort comparisons of life table mortality schedules are obtained by using the 5-year average survival rate distributions for the successive birth cohorts to estimate for each cohort the parameters of Anson's (1991) general model of age-specific mortality hazard rates - the empirical probability of dying within 5 years of age x, conditional on having survived to that age.  A variety of tests show the gross changes of interest to be statistically significant.  The discussion contrasts the mortality transition among the royal families' members with the contemporaneous demographic experience of rural and urban segments of the English population at large.

Reference: 083

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Authors: Florian Ploeckl

Aug 2010

The Zollverein, the German customs union of 1834, was the institutional centrepiece of Germany's economic unification.  A bargaining model is applied to analyze the structure of its negotiation process and accession sequence.  The existence of negative coalition externalities, the effect of a coalition of non-participants, led Prusssia to choose sequential over multilateral negotiations.  The nature of these externalities within the areas of financial revenues, trade policy and domestic political economy also explains the observed accession sequence.  The choice of a customs union as institutional structure allowed Prussia to extract higher concessions from other states due to stronger coalition externalities.

JEL Codes: N73, F13

Keywords: Customs union, Trade agreements, Coalition externalities

Reference: 084

Individual View

Authors: Avner Offer, Rachel Pechey, Stanley Ulijaszek

Jul 2010

Among affluent countries, those with market-liberal welfare regimes (which are also English-speaking) tend to have the highest prevalence of obesity.  The impact of cheap, accessible high-energy food is often invoked in explanation.  An alternative approach is that overeating is a response to stress, and that competition, uncertainty and inequality make market-liberal societies more stressful.  This ecological regression meta-study pools 96 body-weight surveys from 11 countries c. 1994-2004.  The fast-food 'shock' impact is found to work most strongly in market liberal countries.  Economic insecurity, measured in several different ways, was almost twice as powerful, while the impact of inequality was weak, and went in the opposite direction.

Reference: 082

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Authors: C. Knick Harley

May 2010

Cotton textile firms led the development of machinery-based industrialization in the Industrial Revolution.  This paper presents price and profits data extracted from the accounting records of three cotton firms between the 1770s and the 1820s.  The course of prices and profits in cotton textiles illumine the nature of the economic processes at work.  Some historians have seen the Industrial Revolution as a Schumpeterian process in which discontinuous technological change created large profits for innovators and succeeding decades were characterized by slow diffusion.  Technological secrecy and imperfect capital markets limited expansion of use of the new technology and output expanded as profits were reinvested until eventually the new technology dominated.  The evidence here supports a more equilibrium view which the industry expanded rapidly and prices fell in response to technological change.  Price and profit evidence indicates that expansion of the industry had led to dramatic price declines by the 1780s and there is no evidence of super profits thereafter.

JEL Codes: N63, N83

Keywords: Industrial Revolution, Cotton textiles, Prices, Profits

Reference: 081

Individual View

Authors: Pablo Astorga

Jan 2010

This paper analyses stability in real multilateral exchange rates in six leading Latin-American economies during the XXth century using a new data set.  A univariate approach is complemented by an error-correction model including key fundamentals.  Unit-root testing shows a very slow process of mean reversion - if any - in the series in levels; however, mean reversion is found after allowing for trends and structural breaks with half-life values ranges from 0.8 to 2.5 years.  We also found reversion to a conditional mean defined by the co-integrating relationship, and that the equilibrium path is largely explained by fundamentals - especially terms of trade and trade openness.  Exchange rate policy proved to have only a transitory effect in generating real depreciation.

JEL Codes: F41, N16, O11

Keywords: Real exchange rates, Purchasing power, Parity, Economic development, Latin America

Reference: 080

Individual View

Authors: Cliff T. Bekar, Clyde Reed

Oct 2009

Between the eleventh and fourteenth centuries English peasants faced large income shocks relative to mean incomes.  Innovations in property rights over land induced peasants to respond by trading small parcels of land as part of their risk coping strategy.  The same period witnessed a dramatic increase in inequality in the distribution of peasant landholdings.  We argue that these events are related.  When agents are able to trade their productive assets to manage risk, wealth dynamics become unstable and generate increasing inequality over time.  We analyze the effects of these dynamics in the context of medieval English land markets and peasant landholdings.

Reference: 079

Individual View

Authors: Mark Koyama

Sep 2009

In pre-industrial economies labour supply curves often bend backwards at very low levels of income.  This changed prior to the industrial revolution: total working hours increased (De Vries (1993), Voth (1998, 2000)).  This paper examines this industrious revolution using a model of labour supply where consumption takes time.  This analytical framework enables us to draw a distinction between a pessimistic account of the industrious revolution as suggested by Van Zanden (2006) and an optimistic account advanced by de Vries (2008) of an industrious revolution driven by changing patterns of demand.  This formulation clarifies the importance of new consumption opportunities in driving hours worked.

JEL Codes: N23, J22

Keywords: Labour supply, Industrious revolution, Consumption, Time allocation

Reference: 078

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Authors: David Chacko

Apr 2009

The frequency and severity of medical liability litigation in the United Kingdom have increased since the middle of the twentieth century.  Recent estimates of settling outstanding negligence claims hover around at least 10 percent of the National Health Service's total annual budget.  This paper argues that the frequency and severity of these claims have increased as patients have been increasingly dissatisfied with the established complaints procedures and regulation of physicians and as doctors have seen their influence in the doctor-patient relationship decrease.  The current litigation situation compared to the past is three pronged: doctors are being sued more often; when sued, they are more likely to lose; and when losing, the claims awarded against them are increasing in size.  As patients become increasingly aware that doctors are more likely to lose when sued and that the courts are more likely to award larger settlements, the frequency with which doctors are sued will almost certainly escalate.  This paper concludes by discussing no-fault compensation as an alternative to litigation that would likely reduce physicians' susceptibility to litigation.

Reference: 077

Individual View

Authors: Scott Andrew Urban

Apr 2009

There is an implicit consensus that 1930s exchange-rate regimes can be characterised as some variant of 'floating'.  This paper applies an adaptation of modern methodologies of exchange-rate regime classification to a panel of 47 countries in weekly observations between January 1919 and August 1939.  On the basis of modern benchmarks, the 1930s world monetary system would not be considered 'floating' or even 'managed floating'.  One implication is that today's fiat-based, managed-floating international financial architecture is unprecedented.

JEL Codes: F31, F33, N10

Keywords: Fixed exchange rate, International reserves, Intervention

Reference: 076

Individual View

Authors: Pablo Astorga

Jan 2009

This paper makes a contribution to the study of economic growth in developing countries by analysing the six largest Latin American Economies over 105 years within a two-equation framework. Confirming previous findings, physical and human capital prove to be key determinants of GDP per capita growth.  However, a more controversial result is an overall negative conditional correlation between trade openness and GDP per head growth - though openness has a positive link via investment. The evidence also shows that macroeconomic instability has been a drag on long-term growth in the region.

JEL Codes: F43, N26, O11

Keywords: Economic Growth, Investment, Openness, Latin America

Reference: 075

Individual View

Authors: Avner Offer

Dec 2008

A large majority of the labour force were manual workers in 1960.  As voters, they had electoral power to pursue collective goods.  As producers they were able to disrupt production.  The majority left school with no qualifications.  Their human capital consisted of skills specific to particular production processes.  These became obsolete with de-industrialization, and with the large rise in secondary and higher education.  Educated workers relied more on individual bargaining power, and less on collective goods.  Casting workers as consumers rather than citizens or producers punished those with low purchasing power, it de-legitimized producer collective action and justified low wages.  Poverty increased and relative wages fell.  Rising productivity was partly offset by rising house prices and longer household working hours.  Council-house sales enfranchised a minority and penalized the rest.  The majority continued to identify as working class, but their culture was discredited by market liberalism and consumerism.

Keywords: Manual Labour, Human Capital, Skills, Consumerism, Housing Market Liberalism

Reference: 074

Individual View

Authors: Leigh A. Gardner

Nov 2008

The early twelfth century was notable for the centralization and consolidation of royal governance in the centre as well as the periphery of Europe.  This paper presents a model of medieval kingship in which consent for the king's rule is founded upon a network of bargains and agreements between the king and magnates who hold local power.  The model is applied to the administration of Scotland under King David I (1124-1153).  David I consolidated and expanded his authority by providing magnates who held local power with incentives to cooperate through the strategic distribution of revenue and provision of protection services, including the enforcement of property rights, dispute resolution and the facilitation of exchange.  This theory is also used to explain Scotland's appropriation of land in northern England following the death of Henry I of England in 1135, and its loss of the same territory after David I died in 1153.

Reference: 073

Individual View

Authors: Luke Samy

Oct 2008

Formed in the mid-nineteenth century, the building soceities grew rapidly from their humble beginnings as localised 'self-help' organisations to become the dominant player in the house mortgage market by the inter-war period.  Throughout the nineteenth and early twentieth centuries, the movement presented itself as a true champion of home ownership and thrift among the working classes, but historians of housing have generally downplayed the role that building societies played, or could have played, in furthering these aims.  This paper examines the archival records of two London-based building societies to investigate empirically the extent to which these institutions helped to overcome financial exclusion and to foster home ownership before the First World War, a time when rental tenure was the norm.  The results show that the case studies examined were not exclusively middle-class in their membership, with one of them in particular showing a genuine commitment to working-class owner-occupation by providing loans to both skilled and unskilled workers on easy repayment terms.  Its success in doing so was based on its innovative agency network which it used to control the adverse selection and moral hazard problems involved in lending to lower-income groups.

Reference: 072

Individual View

Authors: Sandra Gonzalez-Bailon, Tommy Murphy

Sep 2008

Despite some disagreements about specific timing, it is now widely accepted that France was the first European country to experience a systematic decline in fertility, a decline that took place in a very distinctive geographical pattern.  Whereas two areas of low birth rates (the Seine valley and the Aquitaine region) kept spreading, two 'islands' of high fertility (Bretagne and the Massif Central) shrank until they more or less disappeared in the early 1900s.  In an attempt to provide a sensible explanation of this pattern, we build an agent-based simulation model which incorporates both historical data on population characteristics and spatial informaton on the geography of France, and allows us to study the role of social influence in fertility decisions.  We assess how different behavioural assumptions and network topologies cause variations in diffusion patterns, using quantitative data on the Ecclesiastical Oath of 1791 to proxy for the impact of the Revolution.  Analysis of several simulations shows that a combination of both endogenous and exogenous factors help to explain the way in which the diffusion took place and suggests some of the mechanisms through which this was materialised.

JEL Codes: N33, J13, C15

Keywords: Economic History, Demographic History (Europe Pre-1913), France, Demographic Economics, Fertility, Simulation Models (Agent-Based), Diffusion

Reference: 071

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Authors: Avner Offer

Jun 2008

The Meade and Stone approach to national accounting (first published for the UK in 1941) eventually provided the template for the United System of National Accounts.  Feinstein's historical national accounts for the UK developed out of this project and built on its earlier contributions.  He was the foremost constructor of historical accounts in the UK, and shared with other national accounting pioneers a pragmatic approach and a bias against neo-classical general equilibrium.  He made important contributions to growth accounting and the measurement of standards of living, and also left his mark as a teacher and as an academic leader.  His commitment to racial equality in South Africa preceded his academic career, and continued after his formal retirement.

Reference: 070

Individual View

Authors: Guillaume Daudin

Apr 2008

Market size is claimed by various economic traditions to be an important factor in explaining the transition to modern economic growth.  This paper examines whether differences in market size might explain the retardation of the Industrial Revolution in France.  It uses an exceptional source on French domestic trade in a variety of goods in the late eighteenth century: the Tableaux du Maximum.  The first part presents this source and the data.  The second part assesses whether the data are plausible using a logit theoretical gravity equation.  The third part uses the results of this gravity equation to compute the expected market size of specific supply centres.  For all types of high value-to-weight goods, some French supply centres reached 25 million people or more.  For all types of textile groups, some French supply centres reached 20 million people or more.  Even taking into account differences in real, nominal and disposable income per capita, these supply centres had access to domestic markets that were at least as large as the whole of Britain.  Differences in the size of foreign markets were too small to reverse that result.

JEL Codes: F15, N73

Reference: 069

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