Working Papers

Reference: 1996-W07

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Little is known about the length of the working year in pre-industrial times. This paper develops a new method for analysing patterns of time-use in the past. Witnesses accounts in court records, it will be argued, reflect the actual behaviour of a group that is representative of the population at large. This new technique is applied to London during the middle of the eighteenth century. Results are compared with evidence from other eighteenth-century sources. These findings have important implications for our understanding of the Industrial Revolution. Our estimate of the number of working days helps to resolve some apparent contradictions between wage and income measures.

Reference: 1996-W06

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It is commonly accepted that the decline of the Wests woollen industry was in large part due to the greater employment of steam power by the Yorkshire industry. Using the account books of the Stroudwater Canal Company, the article examines the role of the Stroudwater Canal in bringing coal to the mechanising woollen industry in the Stroudwater region of the Gloucestershire industry. It is shown that distance was not the main factor in the movement of coal, but that the toll levels were more important. The article shows that the toll levels significantly affected the amount of steam power employed in the Gloucestershire woollen industry, and that the Stroudwater Canal Company therefore played a significant role in the industrys decline during the early nineteenth century.

Reference: 1996-W04

Individual View

Constructing an agricultural output series requires a rational economic basis on which to convert one crop into another, and a conversion method using only the information which we have at our disposal. The traditional method fails on both counts. We develop two alternative methods. The first is extremely parsimonious but imprecise; the second is less parsimonious but allows us to isolate the effect of different crop rotations on wheat yields. We compare the three methods using the farm dataset compiled by Arthur Young on his tours of England and Wales during the Agricultural Revolution and we show that new fallow crops substantially increased the wheat yield.

Reference: 1995-W02

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Reference: WPS/1994-06

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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

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Urbanization has been extensively used as a proxy for economic activity.  The urban status of settlements is usually determined by an ad hoc population size household.  This paper proposes a new threshold, taking into account the effect of local agricultural endowments.  The new population threshold is a population size, such that for smaller settlements these endowments influence their size, while for larger they do not.  This results in an endogeneous, data based threshold.  The idea is practically shown for Saxony in the 19th century.  The relevance of a different classification is demonstrated in four particular examples, the development of urbanization over time, Gibrat's law, the impact of geography on town locations and the spatial relationship between towns and villages.  The resulst demonstrate that the underlying classification scheme matters for the conclusions drawn from urban data.

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Between the 1870s and World War II, falls in world shipping costs and Western industrialisation gave rise to export-led Southeast Asian growth and specialization in a narrow range of primary commodity exports.  A linked development was the emergence of a few dominant Southeast Asian urban centres, typically primate and always ports.  Drawing on historical census data, this paper uses rank-size distributions and transition matrices to investigate the influence of commodity specialisation and exports on urban systems development in the region.  It is argued that different commodities produced different spread effects, resulting in variation in degrees of urban concentration in the region.  However, geography, path dependence and infrastructrue also shaped urban systems development.  The main cities that emerged during this period became the 'gateways' that connected frontier Southeast Asia to the Global economy,

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Unemployment in the 1930s was low in France by international standards, nevertheless there was a virulent drive to expel immigrant workers as a means of limiting domestic unemployment. This involved not only the repatriation of the foreign chômeur, but also legislation to displace the foreign worker from his workplace. This paper extends the current debate over the effectiveness of this strategy with the use of two archival datasets. The inability of the State to reach its immigrant employment targets is confirmed, but it is suggested that it was not that unemployed Frenchmen were not willing to take the unattractive jobs that immigrants held, but that employers were unwilling to substitute their foreign workers with their French unemployed equivalents that undermined this repatriation drive. One implication is that the repatriation of foreign workers that did take place compromised the economic recovery that would begin in 1936.

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Individual View

This paper analyzes secessions through the lens of representative democratic institutions and considers the incentives of partisan political parties to support independence movements.  It points out that, if anything, separatists should expect to receive support from exactly the "unlike-minded" political party - the reason being that this party might see a break-up as an opportunity to reshape the electorate towards its own preferences.  By doing so, a party could increase its future probability of being elected, while it is also able to shift the entire political spectrum towards its own partisan ideal.  The model is able to explain much of what is currently going on in the debate on Scottish independence, while it can also be applied to issues of political integration (the European Union) and territorial conflicts (think of Ukraine and Russia in relation to Crimea, as well as the situation in Israel).

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By anachronistically attributing the origin and growth of popular education entirely to state intervention, standard histories of state education have failed to delimit sufficiently the states role in educational development. This paper offers a theoretically based examination of the British states intervention in the emerging market for popular education in England during the nineteenth century. It complements conventional neoclassical analysis with recent developments from the fields of methodological individualism and new institutional economics to identify the specific reasons the state first became involved in mass education. The eventual national system of state-provided, free elementary schools, managed by local representative bodies and funded in part through local rates is re-conceptualized as an imperfect solution to problems inherent in achieving an optimal level of schooling in the emerging mass market for education.

Individual View

This paper presents a bargaining model between individuals belonging to different groups where the equilibrium outcome depends on the communication network within each group.  Belonging to a group gives an informational advantage: connections help to gather information about past transactions and this information can be used to make more accurate demands in future bargaining rounds.  In the long-term there is a unique stochastically stable equilibruim which depends on the peripheral or least connected individuals in each group.  Comparative statistics shows that a denser and more homogeneous network allows members of a group to obtain a better deal.  An empirical analysis of the observed price differential between Asian and white buyers in New York's Fulton fish market is consistent with these predictions.  An extension explores an alternative set-up where buyers and sellers belong to the same communication network:

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This paper addresses the hotly-debated question: do Chinese firms overinvest?  A firm-level dataset of 100,000 firms over the period of 2000-07 is employed for this purpose.  We initially calculate measures of investment efficiency, which is typically negatively associated with overinvestment.  Despite wide disparities across various ownership groups, industries and regions, we find that corporate investment in China has become increasingly efficient over time.  However, based on direct measures of overinvestment that we subsequently calculate, we find evidence of overinvestment for all types of firms, even in the most efficient and most profitable private sector.  We find that the free cash flow hypothesis provides a good explanation for China's overinvestment, especially for the private sector, while in the sector, overinvestment is attributable to the poor screening and monitoring of enterprises by banks.

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I present a trade model featuring North-South differences in demand for quality and in quality of task supply.  The model explains a number of stylised facts: Southern firms charge higher factory-gate prices for their products in rich than in poor, and in distant than in near markets.  The model predicts that firms vary the quality of their products across  markets by changing, between varieties, the fractions of low and high-quality tasks.  This mechanism for quality differentiation introduces a new margin to trade: the extensive margin of intermediate imports.  Extension of the model to general equilibrium with heterogeneous firms shows that even under low fixed and zero variable trade costs, only the more productive Southern firms export to the rich Northern market.  Compared to their domestic market, they charge higher prices in the North, with the most productive ones earning higher revenues.

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Information technology, like the telephone, influences market access; this paper answers the question about a reverse effect, does market access affect information technology, in particular its adoption?  Using the introduction of the telephone in Bavaria, I demonstrate with a rank, order and stock effects diffusion model how market access affects the diffusion of local telephone exchanges over towns as well as the rate of adoption of telelphone lines within towns.  The results of a duration analysis show that market access speeds up the diffusion, a spatial correlation specification demonstrates that this is not just a geographic effect.  The rate of adoption within towns is also affected by the adoption of lines in other towns, the results indicate that about 4% of all lines are due to the ability to call outside your local exchange network.  Market access is therefore shown to impact the adoption of technology.

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We present a tractable class of multiproduct monopoly models that involve a generalized form of homothetic preferences. This class includes CES, linear and logit demand. Within the class, profit-maximizing quantities are proportional to efficient quantities. We discuss cost-passthrough, including cases where optimal prices do not depend on other products’costs. We show how the analysis can be extended to Cournot oligopoly. Finally, we discuss optimal monopoly regulation when the firm has private information about its vector of marginal costs, and show that if the probability distribution over costs satisfies an independence property, then optimal regulation leaves relative price decisions to the firm.

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