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

ddd

Discussion Paper No. 285
October 17, 2021

Trade Shocks, Labor Markets and Elections in the First Globalization

Authors:
Bräuer, Richard (Halle Institute for Economic Research and VU Amsterdam)
Hungerland, Wolf-Fabian (Federal Ministry of Economic Affairs and Energy, Berlin)
Kersting, Felix (HU Berlin)
Abstract:
This paper studies the economic and political effects of a large trade shock in agriculture – the grain invasion from the Americas – in Prussia during the first globalization (1871-1913). We show that this shock accelerated the structural change in the Prussian economy through migration of workers to booming cities. In contrast to studies using today’s data, we do not observe declining per capita income, health outcomes or political polarization in counties aected by foreign competition. Our results suggest that the negative and persistent eects of trade shocks we see today are not a universal feature of globalization, but depend on labor mobility. For our analysis, we digitize data from Prussian industrial and agricultural censuses on the county level and combine it with national trade data at the product level. We exploit the cross-regional variation in cultivated crops within Prussia and instrument with Italian trade data to isolate exogenous variation.
Keywords:
globalization; import competition; labor market; elections; agriculture; migration; trade shock
JEL-Classification:
F14; F16; F66; F68; N13; R12
Download:
Open PDF file

Discussion Paper No. 217
December 13, 2019

On the Origins of National Identity

Author:

Kersting, Felix (HU Berlin)
Wolf, Nikolaus (HU Berlin)

Abstract:

What are the origins of national identity? We extend the model by Alesina et al. (2019) to analyze the incentives of elites to use specific types of identity policies in response to shocks, and the extent to which such policies should be effective. To elicit changes in identity we use data on first names given in German cities between 1800 and 1875. We show that parents in cities treated by nation building policies responded by choosing first names of German origin for their children. To control for familyspecific confounding factors, we exploit within family variation. We also show that the response can be conditional on cultural distance to the elite. Finally, Germanic first names had remarkable predictive power for behaviour. We find that individuals with Germanic first names made different marriage choices and were more likely to get actively involved and decorated during the German-French War in 1870/71 and the First World War.

Keywords:

JEL-Classification:

Download:

Open PDF file

Discussion Paper No. 207
December 4, 2019

Rural Transformation, Inequality, and the Origins of Microfinance

Author:

Suesse, Marvin (Trinity College Dublin)
Wolf, Nikolaus (HU Berlin and CEPR)

Abstract:

What determines the development of rural financial markets? Starting from a simple theoretical framework, we derive the factors shaping the market entry of rural microfinance institutions across time and space. We provide empirical evidence for these determinants using the expansion of credit cooperatives in the 236 eastern counties of Prussia between 1852 and 1913. This setting is attractive as it provides a free market benchmark scenario without public ownership, subsidization, or direct regulatory intervention. Furthermore, we exploit features of our historical set-up to identify causal effects. The results show that declining agricultural staple prices, as a feature of structural transformation, leads to the emergence of credit cooperatives. Similarly, declining bank lending rates contribute to their rise. Low asset sizes and land inequality inhibit the regional spread of cooperatives, while ethnic heterogeneity has ambiguous effects. We also offer empirical evidence suggesting that credit cooperatives accelerated rural transformation by diversifying farm outputs.

Keywords:

microfinance; credit cooperatives; rural transformation; land inequality; prussia

JEL-Classification:

G21; N23; O16; Q15

Download:

Open PDF file

Discussion Paper No. 199
November 13, 2019

Weber Revisited: The Protestant Ethic and the Spirit of Nationalism

Author:

Kersting, Felix (HU Berlin)
Wohnsiedler, Iris (HU Berlin)
Wolf, Nikolaus (HU Berlin)

Abstract:

We revisit Max Weber's hypothesis on the role of Protestantism for economic development. We show that nationalism is crucial to both, the interpretation of Weber's Protestant Ethic and empirical tests thereof. For late 19th century Prussia we reject Weber’s suggestion that Protestantism mattered due to an “ascetic compulsion to save”. Moreover, we find that income levels, savings, and literacy rates differed between Germans and Poles, not between Protestants and Catholics using pooled OLS and IV regressions as well as IV mediation analysis. We suggest that this result is due to anti-Polish discrimination.

Keywords:

Max Weber; protestantism; nationalism

JEL-Classification:

N13; N33; O16; Z12

Download:

Open PDF file

Discussion Paper No. 172
July 30, 2019

The Rise of Fiscal Capacity

Authors:

Cantoni, Davide (LMU Munich)
Mohr, Cathrin (LMU Munich)
Weigand, Matthias (LMU Munich)

Abstract:

Having sufficient fiscal capacity to tax is a key hallmark and defining feature of states, and there is a growing literature trying to explain its origins. Existing empirical evidence on fiscal capacity is scarce and focuses on large, ex-post successful territories. In this paper we study the introduction of the first centralized, permanent fiscal institutions in the multifarious territories of the Holy Roman Empire from 1400 to 1800. We link information on fiscal centralization and the size and survival of territories to an extensive dataset on state-formation and growth-related outcomes. We empirically confirm that territories are more likely to centralize when neighboring territories are centralized and when they are exposed to a higher threat of war. In line with the literature on the consequences of fiscal capacity, we show that centralized territories are more likely to survive than non-centralized territories and as a result grow more in size. They invest more in administrative and military structures, but investments in the military only occur in the core areas of centralized territories. This contradicts the central assumption of models on fiscal capacity which states that investments into the military are a non-excludable public good.

Keywords:

JEL-Classification:

Download:

Open PDF file

Discussion Paper No. 143
February 27, 2019

Persistence and Activation of Right-Wing Political Ideology

Authors:

Cantoni, Davide (LMU Munich and CESifo)
Hagemeister, Felix (LMU Munich)
Westcott, Mark (Vivid Economics)

Abstract:

We argue that a long-run cultural persistence of right-wing ideology can explain the recent rise of right-wing populism. Shifts in the supply of party platforms can interact with this existing demand, and give rise to patterns of historical persistence. We study the context of Germany in the 2017 federal election, when the emergence of the AfD offered voters a populist right-wing option, with little social stigma attached. We show that municipalities that expressed strong support for the Nazi party in 1933 are more likely to vote for the AfD now, but not in 2013, when the AfD was a more moderate, fiscally conservative party. Using opinion surveys, we show that these dynamics are not generated by a concurrent demand shift: political attitudes do not shift sharply to the right in the municipalities with a history of Nazi support.

Keywords:

persistence; culture; right-wing ideology; germany

JEL-Classification:

D72; N44; P16

Download:

Open PDF file

Discussion Paper No. 52
November 2, 2017

Coal and Blood: Industrialization and the Rise of Nationalism in Prussia before 1914

Author:

Kersting, Felix (Humboldt-Universität zu Berlin)

Abstract:

Industrialization and the rise of nationalism were the two major developments in Germany before the World War I. A novel county-level dataset reveals that industrialization and nationalism measured by membership in the "Kriegervereine'", the biggest civil organization at the time, were negatively correlated. Using coal potential as an IV for identification, I find strong evidence for a causal impact of industrialization on nationalism. In order to detect possible mechanisms, a three stage IV regression model produces strong support that migration and trade union membership were crucial factors that linked industrialization and nationalism.

Keywords:

nationalism; industrialization; prussia

JEL-Classification:

F06; N13; N33

Download:

Open PDF file