B08
Competition between States and the Historical Roots of Identity
Discussion Papers

Discussion Paper No. 496
February 16, 2024

From Couch to Poll: Media Content and The Value of Local Information

Author:

Bühler Mathias (LMU Munich)
Andrew Dickens (Brock University)

Abstract:

We document the importance of local information in mass media for the political engagement of citizens and accountability of politicians. We study this in the context of Canada, where until 1958, competition in television markets was suppressed—Canadians received either public or private television content, but never both. While public television provided national-level informational content, private television content was distinctly local and more politically relevant to voters. We find that the introduction of television reduced voter turnout, but that this effect is exclusive to public television districts. Our findings qualify existing knowledge about the political effects of the rollout of new media, by allowing the informational content to vary while holding the media type constant. We support this argument with evidence from parliamentary debates: politicians from districts with private television are more likely to speak and act on behalf of their constituents in Parliament. Our findings thus suggest that politicians are held accountable by relevant media content.

Keywords:

JEL-Classification:

D72; L82; N42;

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Discussion Paper No. 465
November 29, 2023

Fickle Fossils. Economic Growth, Coal and the European Oil Invasion, 1900-2015

Author:

Miriam Fritzsche (HU Berlin)
Nikolaus Wolf (HU Berlin)

Abstract:

Fossil fuels have shaped the European economy since the industrial revolution. We use new long-run panel data to analyse the effect of both, coal and oil on economic growth between 1900 and 2015, exploiting variation at the level of European NUTS2 and NUTS3 regions. We show that the reversal of fortune of coal regions resulted from the second energy transition. Specifically, an “oil invasion” in the early 1960s turned regional coal abundance from a blessing into a curse. Human capital accumulation contributed to this reversal of fortune and fully explains the negative effects until today. Moreover, we find substantial heterogeneity between former coal regions that is in line with Glaeser’s “reinvention hypothesis”: regions with a higher skill-level adjusted much better to the decline of coal. In particular, we show that coal regions with a higher urban density before 1800 were much more resilient than others.

Keywords:

coal; oil invasion; second energy transition; education; reinvention; growth;

JEL-Classification:

O13; O44; Q32; N14; R10; I25;

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Discussion Paper No. 462
November 24, 2023

Industrialization, Returns, Inequality

Author:

Thilo N. H. Albers (HU Berlin)
Felix Kersting (HU Berlin)
Timo Stieglitz (HU Berlin)

Abstract:

How does revolutionary technological change impact wealth inequality? We turn to the mother of all technological shocks–the Industrial Revolution–and analyze its role for wealth concentration both empirically and theoretically. Based on a novel dataset on wealth shares at the level of Prussian counties, we provide causal evidence on the positive effect of industrialization on the top percentile's wealth share and the inequality among top fortunes. We show that this relationship between industrialization, wealth concentration, and tail fattening is consistent with both cross-country data on national wealth distributions and with a new individual-level dataset of Prussian millionaires. We disentangle the mechanisms underlying the observed wealth concentration and tail fattening by introducing a dynamic two-sector structure into an overlapping generations model with heterogeneous returns to capital. In particular, we study the role of sector-specific scale dependence, i.e. the positive correlation of rates of return and wealth in industry, and dynastic type dependence in returns, i.e., the gradual one-directional transition of wealth-holders from the low-return traditional to the high-return industrial sector. The simulations suggest that the combination of these two features explains about half of the total increase of the top-1% share, while the other half resulted from the general increase and higher dispersion of returns induced by the emerging industrial sector.

Keywords:

rates of return; wealth inequality; industrialization; technology; simulation;

JEL-Classification:

D31; E21; N13; O14;

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Discussion Paper No. 448
November 9, 2023

Mimicking the Opposition: Bismarck's Welfare State and the Rise of the Socialists

Author:

Felix Kersting (HU Berlin)

Abstract:

This paper examines the consequences of a government mimicking the policy of its competitor by studying the introduction of the welfare state in 19th century Germany. The reform conducted by the conservative government targeted blue-collar workers and aimed to reduce the success of the socialist party. The result based on a difference-in-differences design shows that the socialist party benefited in elections due to the reform. The analysis of the mechanism points to the socialist's issue ownership by strengthening its reform orientation, which voters followed. The results are not driven by other political and economic channels related to the reform.

Keywords:

welfare state; socialism; government; opposition; issue ownership; voting behavior; Germany;

JEL-Classification:

D74; H53; I38; N44; P16;

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Discussion Paper No. 435
October 24, 2023

Accommodation of Right-Wing Populist Rhetoric: Evidence From Parliamentary Speeches in Germany

Author:

Emilio Esguerra (LMU Munich)
Felix Hagemeister (Süddeutsche Zeitung Digitale Medien)
Julian Heid (LMU Munich)
Tim Leffler (LMU Munich)

Abstract:

We provide novel evidence on how right-wing (populist) rhetoric spreads. Using several thousand speeches from the German parliament, we show that exposure to politicians from the right-wing populist Alternative for Germany (AfD) leads mainstream politicians to adopt a more distinctively right-wing populist language. We measure similarity to right-wing populist rhetoric via cosine similarity to both parliamentary speeches by the AfD and extremist speeches at far-right rallies, as well as using a populist dictionary method. To induce individual-level variation in exposure to AfD politicians, we exploit a quasi-exogenous allocation rule for committee members in the German parliament. Comparing a politician with the highest to one with the lowest relative AfD exposure increases the cosine similarity to right-wing populist speech by 0.1 of a standard deviation. Our results seem specific to right-wing populism and suggest strategic motives related to local electoral competition behind rhetorical changes among individual politicians.

Keywords:

right-wing populism; AfD; Germany; NLP;

JEL-Classification:

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Discussion Paper No. 425
September 15, 2023

Selective Default Expectations

Author:

Olivier Accominotti (London School of Economics and Political Science)
Thilo N. H. Albers (HU Berlin)
Kim Oosterlinck (Université libre de Bruxelles)

Abstract:

This paper explores how selective default expectations affect the pricing of sovereign bonds in a historical laboratory: the German default of the 1930s. We analyze yield differentials between identical government bonds traded across various creditor countries before and after bond market segmentation. We show that, when secondary debt markets are segmented, a large selective default probability can be priced in bond yield spreads. Selective default risk accounted for one third of the yield spread of German external bonds over the risk-free rate during the 1930s. Selective default expectations arose from differences in the creditor countries' economic power over the debtor.

Keywords:

sovereign risk; debt default; secondary markets; creditor discrimination;

JEL-Classification:

F13; F34; G12; G15; H63; N24; N44;

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Discussion Paper No. 408
July 5, 2023

State Repression, Exit, and Voice

Author:

Mathias Bühler (LMU Munich)
Andreas Madestam (Stockholm University)

Abstract:

What is the political legacy of state repression? Using local variation in state repression during the Khmer Rouge genocide in Cambodia, we investigate the effects of repression on political beliefs and behavior. We find that past state repression decreases votes for an authoritarian incumbent while enhancing electoral competition and support for democratic values four decades later. At the same time, individuals become more cautious in their interactions with the local community: they exhibit less trust, participate less in community organizations, and engage less with local government. Our theoretical model suggests that these opposing forces arise because experiencing repression bolsters preferences for pluralism while also heightening the perceived cost of dissent. Consequently, citizens are more likely to support the opposition in elections (voice) but engage less in civil society (exit) to avoid publicly revealing their political views. Exploring channels of persistence, we demonstrate that repression cultivates a lasting fear of violence as a societal threat, and that genocide memorials and remembrance ceremonies maintain the collective memory of the atrocities.

Keywords:

state repression; political beliefs and behavior; collective memory; state-society relations;

JEL-Classification:

D7; N4; O1;

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Discussion Paper No. 407

Female Education and Social Change

Author:

Mathias Bühler (LMU Munich)
Leonhard Vollmer (LMU Munich)
Johannes Wimmer (LMU Munich)

Abstract:

Does access to education facilitate the emergence of a human capital elite from which social activists, and thus, social change can emerge? Assembling a city-level panel of the political, intellectual, and economic elite throughout German history, we find that the opening of schools providing secondary education for women increased their representation among the human capital elite. These elites challenged the status quo and developed critical ideas that resonated in cities with higher human capital, connecting women to form a social movement. We find no evidence of other city-specific indicators of economic and gender-specific cultural change affecting our results. Differential returns to education are also unrelated to the increasing representation of women among the human capital elite, as the opening of gender-specific schools has no impact on the opposite gender.

Keywords:

female education; human capital; women's rights;

JEL-Classification:

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Discussion Paper No. 390
March 16, 2023

Can Grassroots Organizations Reduce Support for Right-Wing Populism via Social Media?

Author:

Johannes Wimmer (LMU Munich)
Leonhard Vollmer (LMU Munich)

Abstract:

The rise of right-wing populism throughout Western democracies coincided with an increasing adoption of social media – both among supporters and opponents of right-wing populism alike. In light of these trends, we assess whether grassroots organizations are effective in combating right-wing populism via social media. We study this question using a tightly controlled online field experiment embedded in the Facebook campaign of a German grassroots organization. Leveraging geo-spatial variation in where the organization disseminated its Facebook ads targeting Germany’s leading right-wing populist party (AfD), we find that the campaign did not significantly affect the AfD’s vote share and turnout. Drawing on data from a complementary online experiment, we show that insufficient outreach on Facebook together with the absence of individual-level responses of attitudes and behavior explains why the campaign did not meaningfully shape aggregate election outcomes.

Keywords:

JEL-Classification:

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Discussion Paper No. 379
February 2, 2023

Trade and Regional Economic Development

Author:

Mathias Bühler (LMU)

Abstract:

A central argument for trade liberalization is that when the `gains from trade' are shared, countries see large gains in economic development. In this paper, I empirically evaluate this argument and assess the impact of elite capture on regional development. Africa provides a unique study ground because the arbitrary placement of country borders during the colonial period partitioned hundreds of ethnic groups across borders. This partitioning is a source of variation in population heterogeneity and cross-country connectedness that is independent of economic considerations. Thus, African borders provide both a credible instrument for bilateral trade flows and enable the assignment of trade flows ---and their impacts--- to individuals. I find that while ethnic networks increase trade flows, increased trade activity decreases subnational economic development when measured by satellite data or individual wealth. I show that this counter-intuitive result comes from elite groups capturing the gains from trade, with detrimental impacts on trust and democratic progress in society.

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JEL-Classification:

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