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Culture and Institutions: Economic Development in the Regions of Europe
Abstract
Does culture have a causal effect on economic development? The data on European regions suggest that it does. Culture is measured by indicators of individual values and beliefs, such as trust and respect for others, and confidence in individual self determination. To isolate the exogenous variation in culture, we rely on two historical variables used as instruments: the literacy rate at the end of the 19th century, and the political institutions in place over the past several centuries. The political and social history of Europe provides a rich source of variation in these two variables at a regional level. The exogenous component of culture due to history is strongly correlated with current regional economic development, after controlling for contemporaneous education, urbanization rates around 1850, and national effects. (JEL: O10, F10, P10, N13) (c) 2010 by the European Economic Association.
... Analyses of formal institutions have covered their impact on a wealth of factors, including regional growth (e.g., Charron et al. 2014;Muringani et al. 2019), innovation (Rodríguez-Pose and Di Cataldo 2015), productivity (Rodríguez-Pose and Ganau 2022), diversification (Cortinovis et al., 2017), and the effectiveness of cohesion policy (Rodríguez-Pose and Garcilazo 2015). Meanwhile, informal institutions-particularly trust and social capital (e.g., Putnam 1993)-have been examined in relation to knowledge exchange (Malecki, 2012), collaboration (Murphy, 2006), innovation (Cooke et al. 1998), and economic growth (Beugelsdijk et al. 2004;Tabellini 2010;Forte et al. 2015). ...
... Social trust refers to the trust individuals have in other people not familiar to them (Fukuyama 1995;Newton and Zmerli 2011;Tabellini 2010;Uslaner 2008). A general sense of trust within society affects economic development by resolving collective action dilemmas, enabling societies to reach more productive equilibria. ...
... Despite the perceived positive economic impact of trust (Bjørnskov 2012), empirical research on the link between social trust and economic development remains inconclusive, with results ranging between negative and significant associations (Schneider et al. 2000), non-significant associations (e.g. Akçomak and Ter Weel 2009;Beugelsdijk and Van Schaik 2005;Neira et al. 2009), and positive and significant connections (Tabellini 2010). Some suggest that the relationship is non-linear and heterogeneous for different types of regions (Peiró-Palomino 2016). ...
This paper examines the complex relationship between political and social trust, government quality, and economic development across 208 regions in the European Union (EU). We use a pooled data generalized structural equation model (GSEM) to show that political trust serves as a fundamental driver of regional economic development in the EU. Political trust is, in turn, influenced by both social trust and government quality. Social trust and government quality have quadratic effects on political trust, showing diminishing returns, while the effect of political trust on economic development is linear. Political trust mediates the relationship between social trust and economic development entirely, while government quality retains a direct relationship with economic development. These findings underscore the fundamental role that political trust plays as a mechanism through which both formal and informal institutions shape regional development.
... In addition to trust's effects on economic development and growth, previous studies found that trust plays a crucial role in social and political progress. Trust can help explain phenomena such as judicial system efficiency, voting behavior, and public policy (La Porta et al., 1997;Tabellini, 2010). Kasmaoui and Errami (2017) found that social trust significantly affects how well institutions can function. ...
... He discovered that significant differences exist between gender and social trust, with women exhibiting higher levels of social trust compared to men. Other researchers, on the other hand, argue that social and contextual factors such as national wealth, income inequality, public policy, and governance quality shape trust levels (Deneulin & Bano, 2009), in addition to the historical and cultural heritage and domestic events, such as wars and civic unrest affect the degree of trust prevalent in society (Putnam et al., 1993;Tabellini, 2010). For Collier (2002), trust results from social interaction, meaning that trust is a function of social interactions. ...
... People who trust their government and domestic institutions must demonstrate better social trust. Tabellini (2010) argued that societies where individuals have cultural traits such as low social trust are more backward regions that historically have higher illiteracy rates and inefficient political institutions. In other words, poor institutional quality, and lack of trust in domestic institutions can reduce social trust. ...
Human beings are social creatures in their nature, as Aristotle stated 2400 years ago. Society needs trust for economic and social development as it shapes interactions and relations among individuals and groups. Opinion surveys offer global comparisons of trust levels and show heterogeneity. For example, in countries such as Sweden and Norway, more than 60% of respondents reported that 'most people can be trusted.' On the other hand, in countries such as Türkiye, Iran, and other Middle East countries, less than 15% think this is the case. This study offers an overview of trust in Iran and Türkiye. It examines types of trust utilizing the World Values Survey data. Citizens in Iran and Türkiye have the highest trust in close groups such as their families. On the other hand, trust in outgroups such as people from another nationality or different religions could be higher to moderate. Moreover, the Iranian and Turkish public consider institutions such as the armed forces more trustworthy, whereas international institutions such as the IMF and WHO are less trusted.
... Second, among the established instruments for economic institutions, immediate candidates relate to historical variables. Tabellini (2010) argues and shows that historical variables, such as the literacy rate in 1880 and early political constraints on executives, isolate the exogenous variation in culture from the possibly endogenous variation in culture due to the unobserved error term. We adopt the same strategy and use the literacy rate in 1930 as an exogenous determinant of current government quality. ...
... While Tabellini's (2010) dataset is freely available, it only contains 69 regions, many of which belong to countries that are excluded from our sample. Therefore, we use the literacy rate in 1930 from Diebolt and Hippe (2019), 13 which covers 81 regions of six countries available in our sample (Austria, Spain, Finland, France, Italy and Portugal), giving a subsample that represents Southern, Western and Northern Europe. ...
... Acemoglu et al., 2014;Eicher & Leukert, 2009;Tabellini, 2010). The main Share of high-growth firms and quality of regional government, 2017. ...
... This brings us to the significant role of history. While there are many examples of ancient polities casting long shadows (e.g., Becker et al., 2016;Guiso et al., 2016;Lowes et al., 2017;Tabellini, 2010), in the following we want to exemplify the importance of history, particularly when combined with a geographical psychology lens, by highlighting the influential role of the Industrial Revolution. Recently, in analysis by the BBC (2021) it was shown that regions with poor health outcomes (e.g., in terms of child mortality) 200 years ago are still among the regions with the poorest health outcomes today, despite the many improvements in healthcare introduced by the British National Healthcare System. ...
... Moreover, it can be regarded as well-established now that culture can shape economic development of regions (Guiso et al., 2006;Tabellini, 2010). ...
In light of persistent regional inequalities in adaptive outcomes such as health, wellbeing, and related personality traits, psychological research is increasingly adopting a historical perspective to understand the deeper roots of these patterns. In this study, we examine the role of ancient cultures, specifically the impact of Roman civilization around two thousand years ago, on the macro-psychological character of German regions. We compare present-day regions that were advanced by Roman culture with those that remained outside of Roman influence. Even when accounting for more recent historical factors, we find that regions developed by Roman civilization show more adaptive personality patterns (Big Five) and better health and psychological wellbeing today. Results from a spatial regression discontinuity design indicate a significant effect of the Roman border on present-day regional variation in these outcomes. Additional analyses suggest that Roman investments in economic institutions (e.g., trade infrastructure such as Roman roads, markets, and mines) were crucial in creating this long-term effect. Together, these results demonstrate how ancient cultures can imprint a macro-psychological legacy that contributes to present-day regional inequalities.
... To do so, as is common in the literature to the impact of the free city-state experience during the Middle Ages (Guiso et al. 2016). In turn, Tabellini (2010) shows the relevance of the political institutions in place between 1600 and 1850 and the literacy rate at the end of the nineteenth century when explaining the cultural differences across European regions. In the same vein, and in line with Schulz et al. (2019), the findings of the present paper are consistent with the idea that regional variation in certain cultural traits favoring impersonal trust, fairness, and cooperation is the result of the historical processes that contributed to shaping kin-based institutions during the Middle Ages (Henrich 2020; Schulz 2022). ...
... In this way, this study would also relate to works that have highlighted the importance of culture and social capital in explaining the current differences in development levels across European regions. For example, Tabellini (2010) documents that several cultural traits, such as interpersonal trust and individualism, are positively associated with present-day regional economic development in Europe. Similarly, Forte et al. (2015) show that higher levels of trust and active associationism lead to more intense regional growth in the EU. ...
This paper examines the relationship between kin-based institutions and quality of government in the regions of Spain, France, and Italy. The results show that the rate of cousin marriage during the twentieth century is a strong predictor of the modern-day quality of government in the regions of these three countries. Regions characterized by a higher prevalence of cousin marriage tend to have on average worse governance outcomes. This finding holds after accounting for country fixed effects and different variables that may be correlated with both consanguinity and regional quality of government, including an extensive array of geographical, historical, and contemporary factors. The observed association between cousin marriage and quality of government persists when I utilize an instrumental variable approach that exploits regional variation in the degree of historical exposure to the marriage laws of the medieval Catholic Church to address potential endogeneity concerns. Furthermore, the paper also provides evidence consistent with the idea that the effect of cousin marriage on the quality of government operates through its impact on a series of cultural traits such as impersonal trust, fairness, and conformity-obedience.
... A few existing studies do consider a role for informal institutions or social capital in explaining cross-country differences in income or health status. Tabellini (2007) analyses the effect of culture on per capita output across regions in European countries, but his paper also includes some cross-country regressions examining relationships between different indicators of culture and governance, that is formal institutions. Tabellini's measure of culture includes survey-based information on the extent of trust, whether people believe children should be taught to respect others, whether they should be taught to be obedient. ...
The write up of this article is about Critical evaluation of institutional quality on standard of living in middle-income sub-Sahara African (SSA) countries. To my knowledge little has been done to critically evaluate institutional quality on standard of living in middle-income sub-Sahara African (SSA) countries.The challenges facing SSA especially the middle-income SSA countries are enormous. These include weak institutions in terms of good governance, accountability and transparency which are addressed in this paper. The objective of this paper is to address the role of institutional quality on standard of living in those countries from 2013 to 2022. The research used secondary data sourced from World Bank governance indicators and transparency international. The method of analysis adopted is panel data using the panel corrected standard error (PCSE) and generalized method of moments (GMM). The analysis produced apriori expectation. The findings are in line with theory. Both static and dynamic methods on institutional quality and standard of living indicates that most of the countries examined shows inconclusive result in terms of rule of law, corruption, bureaucratic quality and property rights. As a result the study recommends policies to address these critical issues to improve economic activities in the middle-income SSA countries. In addition, rule of law need to be implemented to the later and educational sector given utmost priority to upgrades standard of living in middle-income sub-Sahara African (SSA).
... Researchers have tended to work with some measure of "trust" to measure what I am referring to as community capital, and trust has been found to correlate with various outcomes and measures of a society's success (e.g., Banfield (1958); Knack and Keefer (1997); Putnam (2000); Hampton and Wellman (2003); Tabellini (2010) ;Nannicini, Stella, Tabellini, and Troiano (2013)). ...
I provide a typology of social capital, breaking it down into seven more fundamental forms of capital: information capital, brokerage capital, coordination and leadership capital, bridging capital, favor capital, reputation capital, and community capital. I discuss how most of these forms of social capital can be identified using different network-based measures.
... Researchers suggested that social trust can effectively reduce transaction costs and promote cooperation among people or organizations with different backgrounds and can eventually drive social and economic development in a region (Arrow 1972;Coleman 1988;Putnam 2000;Guiso et al. 2009;Algan and Cahuc 2010). Considering the increasing proportion of anonymous transactions in the current market system, social trust will play a more important role in maintaining the volume of transactions (Knack and Keefer 1997;La Porta et al. 1997;Greif and Tabellini 2010;Tabellini 2010). Given its importance, it is meaningful to explore the determinants of social trust. ...
This paper discusses how geographic features affect the level of social trust in a region. Using individual-level survey data from China with more than 40,000 observations, the authors find that social trust is higher in cities that are located at the border of provinces. The ruggedness of the traffic route between the city and the capital city of the province is added to the empirical model as an instrumental variable for further analysis. This solves the measurement error and the omitted variables problems in the baseline empirical model. Results of the two-stage least least-squares estimation show that the level of average social trust is still higher in the border cities. The mechanism explaining the empirical results is that the population in China has tended to migrate from the border cities to nonborder cities. This leads to residents in the nonborder cities having multiple cultures, which increases the probability of misperception in the coordination of daily life. Consequently , misperception among groups with different cultures lowers the level of social trust in the nonborder city.
... First, it is important to note that ideational values, macroeconomic conditions, and institutions are highly interrelated (as is true in this study-see Table S1), and it is not straightforward to distinguish them in empirical analyses. Economic conditions correlate with societal values and welfare state provisions have an ideational basis (Guiso et al., 2006;Tabellini, 2010). Countries with generous family-friendly policies also tend to have a supportive labor market and promote greater gender equality . ...
A growing body of research shows that demographic attitudes and behaviors across the life course are socially stratified. Building on this and focusing on the transition to parenthood, we hypothesize that (i) parental socioeconomic status is associated with multiple dimensions of the transition to parenthood, including fertility norms (perceived lower age limit at first birth), ideals (ideal age at first birth), and behaviors (age at first birth), and that (ii) this association varies across national contexts, as national contexts determine the opportunities and constraints that guide young adults’ life course attitudes and behaviors. Drawing on the European Social Survey 2006 and 2018 data, we analyze early fertility norms and ideals and later fertility behaviors of a pseudo-panel of individuals born between 1976 and 1988. We show that (i) parental socioeconomic status is positively associated with later fertility norms, later fertility ideals, and later childbearing, even when controlling for respondents’ own socioeconomic status, and that (ii) national contexts partially moderate these associations. We conclude by discussing implications for theories of fertility and highlighting avenues for future research.
Supplementary Information
The online version contains supplementary material available at 10.1007/s10680-024-09718-2.
... Üçüncü grup, kültürün ülkeler arasında ekonomik büyüme ve makroekonomik istikrarın sağlanmasında oynadığı önemli role odaklanmaktadır. Hükümetin ekonomik büyümeyi teşvik etmeye yönelik politikalarının etkili olabilmesi için hakim kültüre uyarlanması gerekmektedir (Grosso & Smith, 2012;Michau, 2013;Minkov & Blagoev, 2009;Tabellini, 2010;Disli vd., 2016;Gorodnichenko & Roland, 2017). Levchenko vd. ...
ZET Devletlerin istikrarsızlık sorunu, ülkelerin ekonomilerini etkilemektedir. Planlı ekonomiden piyasa ekonomisine geçen her ekonominin temel amacı, ekonomik gerilemenin durdurulması, iç ve dış dengesizliklerin giderilmesi ve sürekli bir ekonomik büyümenin sağlanmasıdır. Bunun için farklı düzeylerde istikrarı yönetmeyi mümkün kılacak etkili bir araca ihtiyaç vardır. Ekonomileri istikrara kavuşturmak için ortak ve temel farklılıkları vurgulamak amacıyla, bir dönemden diğerine geçişte makroekonomik politikalar hakkında bir görüş elde etmeyi sağlayan makroekonomik istikrar beşgeni kavramı kullanılmaktadır. Bu kavram, kamu politikalarının etkinliğinin değerlendirilmesi konusunda yeni bir anlayış getirmiştir. Düşük-orta gelirli Türkiye ekonomisinde 2001 yılında yaşanan kriz için uygulanan politikaların ve sonrasındaki yirmi yılın istikrar durumunu analiz edebilmek amacıyla 2002-2023 döneminde makroekonomik istikrar beşgeninin (MSP) uygulanabilirliği araştırılmıştır. Bu kıyaslama aracı, enflasyon ve ekonomik büyüme, işsizlik, bütçe açığı (GSYH'nin %'si), cari açık (GSYH'nin %'si) gibi önemli makroekonomik göstergeler arasındaki karşılıklı bağımlılığı göstermektedir. Tüm göstergeler, özel bir dereceli ölçek üzerinde temsil edilmektedir. Bu kavramı dünya ekonomilerine uygulayan çalışmalar olmasına karşın, Türkiye ekonomisi için bir çalışma bulunmamaktadır. Bu yönüyle çalışma literatürde önemli bir boşluğu doldurmayı hedeflemektedir. Bulgular, kamu politikalarının geliştirilmesine temel teşkil etmektedir. MSP modelinin ana bulguları, modelin Türkiye ekonomisinin analizi için uygulanabilir olduğunu kanıtlamaktadır. Bu model, özellikle işsizlik ve enflasyon süreci düzenlemeleri alanında kamu politikalarının etkinliğinin değerlendirilmesinde bir araç olarak kullanılabilir. ABSTRACT The problem of instability of states affects the economies of countries. The main objective of any economy moving from a planned economy to a market economy is to halt economic decline, eliminate internal and external imbalances and ensure sustained economic growth. This requires an effective instrument that makes it possible to manage stability at different levels. In order to highlight common and fundamental differences in order to stabilise economies, the concept of the pentagon of macroeconomic stability is used, which allows to obtain a view on macroeconomic policies in the transition from one period to another. This concept has introduced a new understanding of the evaluation of the effectiveness of public policies. The applicability of the macroeconomic stability pentagon (MSP) has been investigated for the period 2002-2023 in order to analyse the stability of the policies implemented for the crisis in 2001 and the following two decades in the low-middle income Turkish economy. This benchmarking tool shows the interdependence between key macroeconomic indicators such as inflation and economic growth, unemployment, budget deficit (% of GDP), current account deficit (% of GDP). All indicators are represented on a specialised graduated scale.
... where INSTR refers to the instrumental variables proposed by Tabellini (2010) to account for the endogeneity problem: (i) regional literacy rates at the end of the nineteenth century (Literacy, 1881) and (ii) executive limitations on local political ...
This study explores the relationship between institutional quality and bioeconomy performance in Italian regions, utilizing both fixed-effects and 2SLS regression models. The findings consistently show a positive association between institutional quality (and its key pillars) and the performance of bioeconomy sectors. These insights offer valuable guidance for policymakers to enhance bioeconomy outcomes through targeted institutional reforms. By contributing to the growing body of research on the regional dimensions of bioeconomy development, this study provides a roadmap for fostering equitable and sustainable growth across diverse regions.
... By exploring the historical implications of naming practices on education, this article therefore enhances our knowledge on the link between cultural change and long-term economic development during the period under study. It can actually be argued that cultural attitudes are a neglected "ingredient" contributing to explaining modern economic growth (Tabellini 2010;Gorodnichenko and Roland 2017;Mokyr 2018;Henrich 2020), including the crucial changes that led to the decline in mortality and fertility during the demographic transition (Brown and Guinnane 2002;Blanc and Wacziarg 2020;Spolaore and Wacziarg 2022), and to increasing investments in education during the same period. This also relates to the long-standing debate on the decline of religious beliefs and the emergence of "modern" family sentiments linked to the "discovery" of children and the consolidation of the nuclear family as the main family type (Ariès 1962;Shorter 1976;Stone 1977;Todd 1985), as well as the changes in gender roles (Hufton 1995;Inglehart and Norris 2003;Goldin 2021) and the rise of individualism that this period also witnessed (Macfarlane 1978;Greif 1994;Hofstede 2001;Bazzi, Fiszbein, and Gebresilasse 2020). ...
Given names hide crucial information about cultural attitudes and beliefs that sheds light on how parents raised their children and the importance they attached to education and other values. Relying on the 1860 Population census for the province of Zaragoza (Spain; almost 400,000 observations), this article shows that naming practices, captured by whether children bear more or less common names and/or were named after their parents, help predicting their educational outcomes, even after controlling for a host of individual-, household-and community-level confounders. Crucially, these results differ by sex, birth-order, socioeconomic status and the urban-rural divide, which allows identifying the mechanisms in place. In particular, bearing a common name is negatively associated with the likelihood of girls attending school and being literate in rural areas. By contrast, being named after parents had a positive influence on boys' education, a pattern that is especially visible for the eldest son from families who have access to land. In addition, the results reported here are stronger in more complex household arrangements. These results therefore stress the role played by inheritance customs and the continuity of the family line on both naming practices and the way that parents allocated resources between their siblings, as well as highlighting the different expectations around the role that sons and daughters played in these societies.
... Since EE are essentially reliant on the formation of networks (Brown & Mason, 2017), the existing levels of trust and cohesion among agents in the region plays a pivotal role in configuring EE by means of affecting the nature of its linkages. For instance, this has been demonstrated in Landry et al. (2002) for manufacturing firms in Montréal, and by Tabellini (2010) for the European case. Yet, EE literature remains mostly attached to a narrow notion of cultural elements that fall short in covering essential features of regions in shaping the context for entrepreneurial endeavors. ...
The literature on Entrepreneurial Ecosystems (EE) originated from assessments of highly successful cases. While this has produced useful insights, it has also generated a sense of isomorphism, seldomly reflecting the entrepreneurial dynamics taking place in a variety of contexts. In this article we critically discuss a selection of underlying issues associated with the configurations of entrepreneurial ecosystems, as well as influential dimensions that are attached to their respective structures, components and interaction dynamics. We argue that ‘generic’ configurations of EE can only offer a limited (if not inaccurate) comprehension of EE dynamics. We propose that ecosystems configurations emerge as outcomes of an interplay involving layers of micro (Entrepreneurial Agency, Socio-Cultural Embeddedness), meso (Sectoral Orientation) and macro (Spatial Features, Historical Trajectories) determinants. These dimensions conform a background that deeply affects the configurations of EE in terms of agents, institutions and interaction dynamics. Understanding the sources of heterogeneity of EE configurations and their respective co-evolutionary nature can provide key insights towards a theory of EE that accommodates distinct manifestations of this phenomenon. We conclude the discussion by outlining a meta-configurational framework to guide future research on this topic of growing relevance.
... The impact of behavioural and cultural characteristics on the institutional and economic development of countries has been thoroughly studied in the works of Tabellini (Tabellini, 2008a(Tabellini, , 2008b(Tabellini, , 2010. Analysis of data from European countries shows that cultural property has an impact on economic development. ...
Human behaviour and institutions are two closely linked concepts. Historically, institutions have been created as a mechanism for limiting human behaviour that exists in a particular social environment. At the same time, the established institutions form certain stereotypes of behaviour or so-called accepted norms of behaviour themselves. One of the most important prerequisites for the successful development of society is the harmonisation of formal institutions and accepted norms of behaviour. Inconsistency of formal institutions with accepted norms of behaviour leads to an increase in transactional costs of institutions' functioning, which has a negative impact both on development prospects and on the welfare of countries.In the present article the mechanisms of institutional influence on the accepted norms of behaviour and on the welfare of countries are discussed. The data on traffic accidents are used, which provide information on both the development of institutions and the overall behavioural conditions in different countries. The structural equation model has been applied to a sample of 50 countries and it has been shown that, along with formal institutions, behavioural prerequisites also have a significant impact on countries' welfare. Institutions influence the welfare of countries not only directly, but also through their influence on existing norms of behaviour. At the same time, the model of structural equations with latent variables makes it possible to assess the level of institutions' impact on the welfare of countries through the influence of behavioural prerequisites.
... The role of cultures and informal institutions has been examined from various perspectives. For instance, the literature suggest social trust as a significant factor in economic development (Knack & Keefer, 1997;Williamson, 2009;Tabellini, 2010), with potential mechanisms including government regulations (Aghion et al., 2010;Cline et al., 2022), labor market arrangements (Algan & Cahuc, 2009), and property rights (Williamson & Kerekes, 2011). Alternatively, Gorodnichenko and Roland (2011b) argue that the cultural determinants of long-run growth essentially lie in the individualism-collectivism dimension, which is supported by a range of empirical evidence (Gorodnichenko & Roland, 2011a, 2012Kyriacou, 2016). ...
This study examines the relationship between two key factors in modern society: democracy and individualism. We hypothesize that extending democratic rights promotes individualism, which is supported by historical evidence from women’s suffrage in the US. Exploiting temporal variations in the passage of suffrage laws across states, border-county-pair analysis shows that the passage of women’s suffrage fostered individualism, as evidenced by an increase in the prevalence of uncommon names. This relationship was more pronounced in areas with higher proportions of adult white women, who were the primary beneficiaries of suffrage extension. Falsification tests confirm that the observed increase in individualism was rooted in the expansion of democratic rights, not merely in advancement of women’s rights.
... In addition to the previously mentioned works, Jellema and Roland (2011) demonstrate that institutional aspects affect convergence differently: while democratic quality significantly influences longterm growth, the legal system does not. The present paper provides new insights into this existing body of research, using a different approach and identifying regulatory quality, democracy, and governmental effectiveness as crucial factors in creating different steady states, consistent with findings by Roland (2004) and Tabellini (2008Tabellini ( , 2010. ...
This paper investigates the nexus between per capita income convergence and political institutions within the Eurozone. Employing data spanning the years 2002–2019, the research initially identifies multiple convergence clusters and subsequently examines the relationship between the creation of these clusters and different aspects of political institutions. The findings reveal that there are multiple steady states in the Eurozone, and their formation is notably influenced by political institutions alongside other conventional economic determinants derived from the Solow model. Furthermore, the study underscores that improvements in regulatory quality, as well as in aspects such as democracy, government effectiveness, and corruption control, positively impact income convergence across all member countries. These findings carry significant policy implications.
... According to Guiso et al. (2006), culture can be defined as -as a set of norms and beliefs that guide the behavior of the members of a social group and that are transmitted fairly unchanged from generation to generation‖. Cultural diversity can strongly influence institutions and economic performances as demonstrated in von Jacobi and Amendolagine (2023) and Tabellini (2010). In Italy, cultural aspects as a factor in influencing institutions were studied by Putnam et al. (1994) and Guiso et al. (2016b), who pointed out an ancestral link between current institutions and different cultural forms inherited locally. ...
... Individuals who worked harder were expected to be more driven to pursue success in their entrepreneurial ventures. Alternatively, if individuals perceived success to be led by luck, they tended to be lazy and carefree (Tabellini 2010). Additionally, a few variables were selected to measure respondents' attitudes toward social issues. ...
Our study utilizes the unique Integrated Values Survey (IVS) dataset, which combines the European Values Study and the World Values Survey, and uses econometric modelling to examine how personality traits relate to self-employment decisions amongst natives, as well as first-generation and second-generation immigrants from 2010 to 2021. We contribute to the literature by focusing on personality traits, as well as literature on immigrant entrepreneurship, particularly for the Organization for Economic Co-operation and Development (OECD) countries. To the best of our knowledge, our study is the first to use the IVS dataset, a large multi-country dataset for such analyses. We further focus on different categories of self-employment, including self-employment with and without employees, and examine their determinants. The evidence indicates that risk-taking and innovation indicators are conducive to self-employment. Our study also notes how the association of education and self-employment differs between natives and immigrants.
... As a result, not only does the individual gain more autonomy over their resources, but economic development contributes to an increase in these resources, which in turn gives the individual more freedom of choice (Welzel, Inglehart, and Klingemann 2003:345). In a positive feedback loop, increased individual autonomy (Tabellini 2010) and growing intellectual resources then further contribute to prosperity and progress (Welzel and Inglehart 2010:49-50). Economic development is further linked to cultural change, which brings about a shift to more secular and more post-materialist values, higher levels of tolerance, trust, and well-being (Inglehart and Baker 2000), and a stronger emphasis on emancipative values. ...
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This paper explores the social structure of individual autonomy in Europe.
Drawing on the capability approach and human empowerment theory, it
investigates how individuals’ sense of autonomy is structured by individual
means and conversion factors as well as economic, cultural, and institutional
context conditions. Using data from the European Social Survey and the
European Quality of Life Survey, these relationships are analyzed for 107,070
individuals in 18 European countries and four points in time between 2006
and 2016. Multilevel analyses reveal financial security, health, and social
connectedness as the most important drivers of individuals’ sense of auton-
omy. On the macro level, national wealth, civil liberties, and an emancipative
value climate are all found to be positively linked to individuals’ sense of
autonomy, albeit weakly. Considering the value individuals attach to leading
an autonomous life and the beneficial effects autonomy has been shown to
have on people’s well-being, these findings shed first light on the unequal
distribution of autonomy and autonomy resources on the individual and
macro levels. Concluding, the paper highlights the potential for future
research and policy implications.
... In other words, trust is often considered a second-order emotion that is based on the emotional state of someone else (Belli & Broncano, 2017). In social science studies, trust is a critical component that would facilitate a range of dynamic social processes, including organizational effectiveness, economic development, and so on (Roth, 2022;Rousseau et al., 1998;Tabellini, 2010). Some believe that trust is one of the critical components in corruption reduction and state-building (Rose-Ackerman, 2001). ...
Extant literature suggests a positive correlation between social trust (also called generalized trust) and life satisfaction. However, the psychological pathways underlying this relationship can be complex. Using the Bayesian Mindsponge Framework (BMF), we examined the influence of social trust in a high-violence environment. Employing Bayesian analysis on a sample of 1,237 adults in Cali, Colombia, we found that in a linear relationship, generalized trust is positively associated with life satisfaction. However, in a model including the interactions between trust and education level as well as between trust and socioeconomic status, generalized trust is found to be negatively associated with life satisfaction. In this non-linear relationship, both education level and socioeconomic status have moderating effects against the negative association between generalized trust and life satisfaction. In other words, less educated people living in worse socioeconomic conditions are more likely to have lower life satisfaction when they have higher levels of social trust. In contrast, highly educated people living in better socioeconomic conditions are more likely to have higher life satisfaction when they have higher levels of social trust. Due to the facilitating function of trust in information processing, lowering the rigor of the filtering system in a high-violence social environment will likely put an individual at risk. Based on our findings, we suggest that policymakers should be more meticulous and consider many socioeconomic factors when advocating for increasing social trust. We also recommend that researchers should investigate deeper the complexity of human psychology and the information-processing mechanisms of social trust.
... Recently, a large body of literature has emerged highlighting the impact of history on shaping attitudes and norms of behaviour in various contexts [49,50]. The persistence of former historical and political borders in trade and economic activities is echoed in numerous studies, underscoring the difficulty of erasing their influence, as they are not merely statistical artefacts. ...
Background
In this paper, we estimate the long-lasting influence of the former Habsburg Empire's border on the territory of Romania, specifically on the prevalence of corrupt behaviour and practices in health services.
Methods
Employing microdata from the 2016 Life in Transition Survey and applying ordered probit regression, we explore the hypothesis that the geographical proximity of respondents' residences to the former imperial border—restricting the analysis within a bandwidth of 50 km, 75 km or even 100 km on either side – significantly influences current individual tendencies towards corrupt behaviour.
Results
The results indicate that individuals in Transylvania living in the immediate vicinity of the former border of the Habsburg Empire (no more than 75 km away) show a higher propensity towards corrupt behaviours, similar to those from Moldova and Wallachia who reside in the same bandwidth but to the east of the former historical border. Interestingly, on one hand, after a series of tests with various relevant factors, the contagion effect is observed from right to left, meaning from those in Moldova and Wallachia towards those in Transylvania, and not the other way around as might be expected based on other previous studies. On the other hand, individuals living more than 75 kms west of the former historical border show clear reluctance to engage in informal payments and gift-giving when interacting with the public health system as patients.
Conclusion
By rigorously controlling for various variables that comprehensively show different legacies of the communist regime, our results confirm the persistence of these influences across different bandwidths, thereby corroborating the hypothesis of path dependence influenced by the former Habsburg Empire.
... Money is also closely linked to time and space (current or past) (Tabellini, 2010). Monetary nationalism is an integral part of independence and statehood (Norkus, 2018). ...
This paper analyses the feasibility of Eco currency to be introduced in fifteen West African states based on political, legal, social, and cultural factors. It aims to examine the core institutions underpinning the creation of the Eco currency and how they can best be designed to achieve the objectives of the single currency. The paper utilises a normative approach to analyse the institutions of the Economic Community of West African States ( ECOWAS ) to decipher the strengths of these institutions in creating and sustaining the single currency. Most studies on Eco currency have analysed the feasibility of Eco based on economic considerations. While economic factors are pertinent to creating a single currency, this paper highlights the importance of effective political, legal, and socio-cultural institutions to harness economic considerations for the common currency to be successful launched. This paper postulates that only effective and well-designed institutions can lead to a successful launch of the Eco currency.
... In addition, we add another institutional controlregional degree of tax autonomy -as in Blöchliger et al. (2016). On top of that, we control for the share of the adult population (over 25-64 years old) with a tertiary education (Active Population Survey (EPA) from the Spanish National Statistics Office (INE)) and agricultural gross value added (GVA) shares from the Fundación de Estudios de Economía Aplicada (FEDEA), following the seminal paper on regional development and culture by Tabellini (2010). Finally, population size, unemployment rate (EPA from the INE) and degree of tax autonomy are also included as controls. ...
We exploit the mixture of policy goals and instruments of the Spanish Regional Funding System (RFS) to test whether equalisation transfers have an impact on regional convergence. Using FE and 2SLS-IV models and data for 15 regions for the 2002-2018 period, we find that both fiscal equalisation and regional transfers show a significant concave convergence promoting effect, which is larger for regional transfers. However, excess/deficit funding caused by overlapping tools and objectives in the RFS does not have a significant relationship with regional convergence. These results are in line with the Tinbergen rule, since it is more cost-effective to promote regional convergence through regional policy funds.
Today we see large differences in the wealth of nations across the world. The nations of the developed world have provided financial help to many nations. In some cases, this assistance has proved beneficial, but in other cases that help has landed in the hands of a few while large numbers of the very poor receive little help. The Arab Spring brought revolution across North Africa. The Middle East is involved in wars since the formation of modern Israel. Russia has attacked Ukraine. China seeks to expand its reach and acquire Taiwan. More recently large numbers of immigrants from Central and South America have marched to the US. Now we see many more immigrants coming to the US from virtually every nation on earth. Some nations have been very successful as they developed with the assistance of rich nations. Examples are South Korea and Costa Rica. Other nations have been plagued with graft and corruption. Examples are Mexico and Venezuela, A case study approach can help identify the lessons learned in economic development and a pathway to better results.
We use novel survey data from Italy to shed light on key questions regarding the measurement of social capital and the use of social capital indicators for empirical work. Our data cover a sample of over 600,000 respondents interviewed between 2000 and 2015. We identify four distinct components of social capital – (i) social participation, (ii) political participation, (iii) general trust, and (iv) trust in institutions – and examine how they relate to each other. We then study how each dimension of social capital relates to various socioeconomic factors both at the individual and the aggregate level, and to various proxies of social capital commonly used in the literature. Finally, building on previous work, we investigate to what extent different dimensions of social capital predict differences in key economic, political, and health outcomes. Our findings support the view that social capital is a multifaceted object with multiple dimensions that, while related, are distinct from each other. Future work should take such multi-dimensionality into account and carefully consider what measure of social capital to use.
Despite the growing attention to the impact of culture on socio-economic indicators, there is a lack of causality evidence. Scholars have noted that cultural values or norms, as well as, a vibrant cultural environment can have a positive impact on GDP growth, labour productivity, the attraction of human capital and the improvement of human well-being. However, the issue of endogeneity is not thoroughly debated. Not only can culture impact economic development, but socio-economic environment also affects the cultural indicators. Therefore, it is essential to identify the causal effects of culture. This article aims to assess whether culture has a causal impact on socio-economic variables. The Granger procedure is utilised to evaluate causal relationships, describing the cultural environment with a comprehensive set of 45 cultural indicators across 30 European countries. This enables the comparison of the relationship between culture and socio-economic variables using the same method across different countries. Additionally, cultural indices are constructed. The research is extended by employing a panel vector autoregression (VAR) model. The key finding of this article demonstrates a causal impact of culture on socio-economic indicators, confirmed by both the Granger procedure and panel VAR estimations.
JEL Code: Z1
This paper presents a conceptual framework connecting historical kinship structures and generalized trust into modern business formation. Kinship intensity, defined as the degree of strength in family ties, is shaping the social and economic outlook of societies. Building upon the existing literature, I argue that societies with strong kinship ties often exhibit collectivist characteristics, leading to less trust towards outsiders. This hinders market efficiency and collaborative partnerships, resulting in business formation being largely confined to family-owned enterprises. Conversely, societies with loose kinship structures exhibits higher level of generalized trust that enable to promote engagements beyond family networks. This promotes establishing larger firms with strangers, more efficient markets, and greater cooperation with foreign firms. The paper suggests that kinship and trust behavior are deeply-rooted in culture and influence social and economic development. It is important for policymakers to support initiatives that foster trust beyond family ties in order to promote collaboration among diverse market participants.
Purpose
This study examines the relationships between green management, perceived barriers to sustainability and innovation performance in Latin American SMEs and how formal and informal institutional factors influence these relationships.
Design/methodology/approach
The study used a dataset collected by Iberoamerican small and medium-sized enterprises (SMEs) Observatory in 2022 and included 15 country-specific indicators for Latin American countries published in international data sources to address the formal and informal institutional contexts. Accordingly, the final sample comprises 11,319 SME observations from 16 countries. The analysis involved three phases. First, an R-Type Exploratory Factor Analysis (EFA). Second, a cluster analysis. Third, a testing of the mediation theoretical model between the groups identified in the second study. To this purpose, the analysis included a multigroup analysis for covariance structure by three-stage procedures conducting structural equation modeling (SEM).
Findings
The results revealed that both formal institutions (such as government policies and regulations) and informal institutions (such as social norms and cultural values) have a positive impact of green management practices on innovative outcomes in SMEs. However, the magnitude of this impact varies depending on the level of country-specific performance of the context. Additionally, the perceived barriers to sustainability do not play an intermediary role in this relationship within both institutional contexts. However, the effect of perceived barriers to sustainability on SMEs' innovation performance is diminished in the informal institutional context.
Originality/value
These conclusions provide valuable insights for policymakers seeking to promote sustainable development in Latin America, highlighting the importance of institutional support in fostering SMEs' adoption of ecological practices.
In this paper, I first present a novel finding: women who have experienced democratic institutions during their impressionable years are more likely to participate in the labor market, while controlling for factors such as country, cohort, language and various other confounding factors. I then provide evidence suggesting that discriminatory attitudes may serve as a channel for this phenomenon. Other explanations receive less support from the data.
In this paper, I assess the existence of a political connection premium for Italian municipalities during the so-called “Second Republic” (1991–2011). The early 1990s witnessed a seminal event in Italian political history with the “Mani Pulite” (“Clean Hands”) investigation following the fall of the Berlin Wall. Subsequently, major political parties dissolved, culminating in a bipolar political landscape characterized by cyclical alternation between center-right and center-left factions (extending until at least 2011). Exploiting population data on small and medium-sized Italian municipalities between 1991 and 2011, I found that “politically connected” municipalities showed a population premium of about 2.5% compared to “non-politically connected” ones. The results are robust to NUTS-3 fixed effects, to a comprehensive set of controls, and to a full set of robustness checks. The relationship is confirmed using aggregate municipal income data as an additional proxy of local economic growth. Over and above this, social capital and the quality of local institutions seem to play a pivotal role in enabling the political connection. Election-related checks suggest the connection as two-way: using municipal data from the 2013 and 2018 general elections, I found that the treated municipalities depicted a higher turnout and fewer populist votes.
This paper examines geographic differences in the effect of immigration on the wage distribution of native Italian workers. The results suggest an insignificant effect across the wage distribution in northern provinces, but large and significant effects in the lower and middle parts of the distribution in the south. This is entirely because immigration pushed up wages at the lower end of the female wage distribution in southern local areas. This result is consistent with increases in labor market participation of native women that went hand in hand with improvements of women's skills at the bottom of the wage distribution.
The multidirectional dynamics of the main components of everyday life - economic and socio-cultural activities in the regions of the Russian Federation may mean the presence of a large value-semantic gap. Quantitative data on the regions of the Russian Federation cannot explain all manifestations of the daily activities of the population and must be correlated with certain cultural attitudes and stereotypes, value preferences of the population, which will form the basis of a semantic construct/ conglomerate of everyday life. Economic systems have a significant impact on everyday life, and material forms of culture contribute to the formation of patterns-images of actions that support or destroy them. Since artifacts uniquely reflect the cultural and socio-economic situation of a particular time period, they can serve as little-studied access points for revealing integration processes or clashes between social, political and cultural spheres of society. The symbiosis of creative and economic thinking has contributed to the socio-historical revision of traditionally economic terms such as "production" and "consumption". The presented hidden processes make it possible to clarify the symbiosis, the fusion of cultural and socio-economic components. A new type of industrial is being formed in its synthetic unity with the cultural one.
Geography has been a fundamental determinant of economic development throughout history, influencing resource distribution, trade routes, climate conditions, and the spatial organization of economic activity. This essay delves into the multifaceted role of geography in shaping economic outcomes, drawing upon historical analyses and contemporary economic theories. By examining the historical origins of economic growth, the impact of geographical barriers and advantages, the influence of climate and natural resources, and the spatial distribution of industries, we explore how geographical factors contribute to international inequality and the divergent development trajectories of nations and regions. The discussion incorporates insights from seminal works, including Koyama and Rubin's "How the World Became Rich," Davis and Weinstein's analysis of the geography of economic activity, and Redding and Venables' exploration of economic geography and international inequality, among others. We also consider the roles of institutions, governance, and technology as mediating factors that can amplify or mitigate the influence of geography on economic development. By highlighting the interplay between geography and these mediating factors, the essay underscores the importance of tailored policy interventions that consider geographical realities. Understanding this complex relationship is essential for addressing global and regional disparities and formulating effective development strategies that leverage geographical advantages while mitigating disadvantages.
Does self‐governance, a hallmark of democratic societies, foster norms of generalized cooperation? Does this effect persist, and if so, why? I investigate these questions using a natural experiment in Switzerland. In the Middle Ages, the absence of an heir resulted in the extinction of a prominent noble dynasty. As a result, some Swiss municipalities became self‐governing, whereas the others remained under feudalism for another 600 years. Evidence from a behavioral experiment, the World Values Survey and the Swiss Household Panel consistently show that individuals from historically self‐governing municipalities exhibit stronger norms of cooperation today. Referenda data on voter‐turnout allow me to trace these effects on individually costly and socially beneficial actions for over 150 years. Furthermore, norms of cooperation map into prosocial behaviors like charitable giving and environmental protection. Uniquely, Switzerland tracks every family's place of origin in registration data, which I use to demonstrate persistence from cultural transmission in a context of historically low migration.
Выборы представляются в качестве неотъемлемого и важнейшего института демократии. Исследование влияния тех или иных факторов на участие граждан в выборных процедурах является важной научной и практической задачей. В условиях существенных внутри- и внешнеполитических сдвигов в самых разных странах мира актуализируется вопрос о влиянии такого традиционного института, как семья на гражданскую и политическую активность граждан. Молодежь традиционно является социо-демографической группой, проявляющей активное внимание к новым, зачастую неконвенциональным, формам политического участия, тогда как устоявшиеся институциональные практики воспринимаются молодежью как незначительные. Несмотря на то, что как в общественном, так и в научном дискурсе все чаще проявляется идея о снижении роли семьи, мы, ориентируясь на исследования ученых разных стран (Индонезия, США, Италия, Чехия, Финляндия, Швеция, Бангладеш, Россия), доказываем, что семья продолжает быть важным фактором, оказывающим влияние на характер участия молодежи в выборах. При этом для молодых людей, впервые принимающих участие в избирательных процедурах, степень влияния оказывается гораздо больше, нежели для более «возрастной» молодежи. Влияние семьи существенно отличается в разных странах, приобретая как формы прямого копирования опыта родителей при участии в выборах, так и заимствуя лишь отдельные элементы, вплоть до отрицания самой идеи участия в голосовании.
Elections are presented as an integral and most important institution of democracy. The study of the influence of various factors on the participation of citizens in electoral procedures is an important scientific and practical task. In the context of significant domestic and foreign policy shifts in various countries of the world, the question of the influence of such a traditional institution as the family on civil and political activity of citizens is being actualized. Young people are traditionally a socio-demographic group that actively pays attention to new, often unconventional, forms of political participation, while well-established institutional practices are perceived by young people as insignificant. Despite the fact that the idea of reducing the role of the family is increasingly manifested in both public and scientific discourse, we, focusing on the research of scientists from different countries (Indonesia, USA, Italy, Czech Republic, Finland, Sweden, Bangladesh, Russia), prove that the family continues to be an important factor influencing the nature of youth participation in elections. At the same time, for young people who take part in electoral procedures for the first time, the degree of influence is much greater than for more "aged" youth. The influence of the family differs significantly in different countries, acquiring both forms of direct copying of the experience of parents when participating in elections, and borrowing only certain elements, up to the denial of the very idea of voting.
This article reviews the growing economics literature that studies the politico-economic impacts of heterogeneity in moral boundaries across individuals and cultures. The so-called universalism-versus-particularism cleavage has emerged as a main organizing principle behind various salient features of contemporary political competition, including individual-level and spatial variation in voting, the realignment of rich liberals and poor conservatives, the internal structure of ideology, and the moral content of political messaging. A recurring theme is that the explanatory power of universalism for left-wing policy views and voting is considerably larger than that of traditional economic variables. Looking at the origins of heterogeneity in universalism, an emerging consensus is that cross-group variation is partly economically functional and reflects that morality evolved to support cooperation in economic production. This insight organizes much work on how kinship systems, market exposure, political institutions, and ecology have shaped universalism through their impacts on the relative benefits of localized and impersonal interactions.
Cross-region investment by enterprises, through the integration of resources from different locations and the expansion of market spaces, has become a crucial engine for promoting high-quality regional economic development. However, the geographical restrictions of traditional financial services significantly hinder enterprise expansion across regions. The emergence of financial technology offers fresh perspectives for addressing this challenge. This paper investigates whether financial technology can stimulate cross-region investment behaviors among enterprises using data from Chinese A-share listed companies from 2009 to 2020. The findings reveal that financial technology significantly facilitates cross-region investment by enhancing the quality of information disclosure, alleviating financing constraints, and advancing digital transformation in enterprises. These conclusions have been validated through a series of robustness tests. However, the impact of financial technology exhibits heterogeneity based on factors such as the ownership structure of the enterprise, industry type, and the degree of capital market openness. Further research indicates that while financial technology-promoted domestic cross-region investments enhance returns on investment, this is not the case with foreign cross-region investments. Our findings unveil new mechanisms through which financial technology promotes cross-region investments in enterprises, offering novel perspectives and strategic recommendations for emerging market countries to fully exploit the potential of financial technology and solve the challenges of cross-region investment. It has significant theoretical value and practical implications for optimizing resource allocation efficiency and promoting balanced and coordinated regional economic development.
This paper shows that social capital increases economic growth by raising government investment in human capital through better political incentives and selection. We provide empirical evidence that a greater share of output is spent on public education where social capital is higher, both across countries and across U.S. states. We develop a theoretical model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, social capital alleviates myopic political incentives to underinvest in human capital. It also helps voters select politicians who ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility.
We investigate empirically the determinants of the quality of governments in a large cross-section of countries. We assess government performance using measures of government intervention, public sector efficiency, public good provision, size of government, and political freedom. We find that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French or socialist laws, or have high proportions of Catholics of Muslims exhibit inferior government performance. We also find that the larger governments tend to be the better performing ones. The importance of (reasonably) exogenous historical factors in explaining the variation in government performance across countries sheds light on the economic, political, and cultural theories of institutions.
Modernization theorists from Karl Marx to Daniel Bell have argued that economic development brings pervasive cultural changes. But others, from Max Weber to Samuel Huntington, have claimed that cultural values are an enduring and autonomous influence on society. We test the thesis that economic development is linked with systematic changes in basic values. Using data from the three waves of the World Values Surveys, which include 65 societies and 75 percent of the world's population, we find evidence of both massive cultural change and the persistence of distinctive cultural traditions. Economic development is associated with shifts away from absolute norms and values toward values that are increasingly rational, tolerant, trusting, and participatory. Cultural change, however, is path dependent. The broad cultural heritage of a society-Protestant, Roman Catholic, Orthodox, Confucian, or Communist-leaves an imprint on values that endures despite modernization. Moreover, the differences between the values held by members of different religions within given societies are much smaller than are cross-national differences. Once established, such cross-cultural differences become part of a national culture transmitted by educational institutions and mass media. We conclude with some proposed revisions of modernization theory.
A theory of the types of values on which cultures can be compared is presented and validated with data from 49 nations from around the world. Seven types of values are identified, structured along three polar dimensions: Conservatism versus Intellectual and Affective Autonomy; Hierarchy versus Egalitarianism; and Mastery versus Harmony. Based on their cultural value priorities, nations are arrayed in a two-dimensional space, revealing meaningful groupings of culturally related nations. Analyses replicate with both teacher and student samples. Implications of national differences in cultural values for differences in meaning of work are explicated. To stimulate research on cultural values and work, hypotheses are developed regarding the cultural value emphases that are especially compatible or conflicting with work centrality, with different societal norms about work, and with the pursuit of four types of work values or goals.
This study presents evidence about relations between national culture and social institutions. We operationalize culture with data on cultural dimensions for some 50 nations adopted from cross-cultural psychology and generate testable hypotheses about three basic social norms of governance: the rule of law, corruption, and democratic accountability. These norms correlate systematically and strongly with national scores on cultural dimensions and also differ across cultural regions of the world. Using a linguistic variable on pronoun drop as an instrument for cultural emphases on autonomy versus embeddedness points to a significant influence of culture on governance. Using cultural profiles of a previous generation as an instrument indicates relative stability of cultural orientations and of their correlates. The results suggest a framework for understanding the relations between fundamental institutions. Journal of Comparative Economics35 (4) (2007) 659–688.
This paper considers the use of instrumental variables to estimate the mean effect of treatment on the treated, the mean effect of treatment on randomly selected persons and the local average treatment effect. It examines what economic questions these parameters address. When responses to treatment vary, the standard argument justifying the use of instrumental variables fails unless person-specific responses to treatment do not influence decisions to participate in the program being evaluated. This requires that individual gains from the program that cannot be predicted from variables in outcome equations do not influence the decision of the persons being studied to participate in the program. In the likely case in which individuals possess and act on private information about gains from the program that cannot be fully predicted by variables in the outcome equation, instrumental variables methods do not estimate economically interesting evaluation parameters. Instrumental variable methods are extremely sensitive to assumptions about how people process information. These arguments are developed for both continuous and discrete treatment variables and several explicit economic models are presented.
This paper integrates game-theoretical and sociological concepts to conduct a comparative historical analysis of the relations between culture and institutions. It indicates the importance of culture, and in particular cultural beliefs, in determining institutions, in institutional path dependence, and in forestalling intersociety successful adoption of institutions. Examination of institutional change in two premodern societies from the Muslim and the Latin worlds yields that their distinct institutional structures resemble those found by social psychologists to differentiate contemporary developing and developed economies. This suggests the historical importance of distinct cultures and the related societal organizations in economic development. Copyright 1994 by University of Chicago Press.
The British Industrial Revolution triggered a socioeconomic transformation whereby the landowning aristocracy was replaced
by industrial capitalists rising from the middle classes as the economically dominant group. We propose a theory of preference
formation under financial market imperfections that can account for this pattern. Parents shape their children's preferences
in response to economic incentives. Middle-class families in occupations requiring effort, skill, and experience develop patience
and a work ethic, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific
attitudes, which are rooted in the nature of preindustrial professions, become key determinants of success once industrialization
transforms the economic landscape.
International surveys reveal wide differences between the views held in different countries concerning the causes of wealth
or poverty and the extent to which people are responsible for their own fate. At the same time, social ethnographies and experiments
by psychologists demonstrate individuals' recurrent struggle with cognitive dissonance as they seek to maintain, and pass
on to their children, a view of the world where effort ultimately pays off and everyone gets their just desserts. This paper
offers a model that helps explain i) why most people feel such a need to believe in a “just world”; ii) why this need, and
therefore the prevalence of the belief, varies considerably across countries; iii) the implications of this phenomenon for
international differences in political ideology, levels of redistribution, labor supply, aggregate income, and popular perceptions
of the poor. More generally, the paper develops a theory of collective beliefs and motivated cognitions, including those concerning
“money” (consumption) and happiness, as well as religion.
We combine two experiments and a survey to measure trust and trustworthiness—two key components of social capital. Standard
attitudinal survey questions about trust predict trustworthy behavior in our experiments much better than they predict trusting behavior. Trusting behavior in the experiments is predicted
by past trusting behavior outside of the experiments. When individuals are closer socially, both trust and trustworthiness
rise. Trustworthiness declines when partners are of different races or nationalities. High status individuals are able to
elicit more trustworthiness in others.
The British Industrial Revolution triggered a reversal in the social order whereby the landed elite was replaced by industrial capitalists rising from the middle classes as the economically dominant group. Many observers have linked this transformation to the contrast in values between a hard-working and thrifty middle class and an upper class imbued with disdain for work. We propose an economic theory of preference formation in which both the divergence of attitudes across social classes and the ensuing reversal of economic fortunes are equilibrium outcomes. In our theory, parents shape their children’s preferences in response to economic incentives. If financial markets are imperfect, this results in the stratification of society along occupational lines. Middle-class families in occupations that require effort, skill, and experience develop patience and work ethic, whereas upper-class families relying on rental income cultivate a refined taste for leisure. These class-specific attitudes, which are rooted in the nature of pre-industrial professions, become key determinants of success once industrialization transforms the economic landscape.
We investigate empirically the determinants of the quality of governments in a large cross-section of countries. We assess government performance using measures of government intervention, public sector efficiency, public good provision, size of government, and political freedom. We find that countries that are poor, close to the equator, ethnolinguistically heterogeneous, use French or socialist laws, or have high proportions of Catholics or Muslims exhibit inferior government performance. We also find that the larger governments tend to be the better performing ones. The importance of historical factors in explaining the variation in government performance across countries sheds light on the economic, political, and cultural theories of institutions.
This study analyzes the impact of various forms of "social capital" on governmental performance in the American states. Aspects of social capital that are conceptually identified with generalized reciprocity (such as social trust, volunteering, and census response) are associated with better governmental performance, as measured by ratings constructed by the Government Performance Project. In contrast, aspects of social capital identified with social connectedness (including activity in associations and informal socializing) are unrelated to governmental performance. These findings call into question the use of heterogeneous indexes of social capital that mix social connectedness indicators together with indicators of generalized trust and reciprocity.
The conditions associated with the existence and stability of democratic society have been a leading concern of political philosophy. In this paper the problem is attacked from a sociological and behavioral standpoint, by presenting a number of hypotheses concerning some social requisites for democracy, and by discussing some of the data available to test these hypotheses. In its concern with conditions—values, social institutions, historical events—external to the political system itself which sustain different general types of political systems, the paper moves outside the generally recognized province of political sociology. This growing field has dealt largely with the internal analysis of organizations with political goals, or with the determinants of action within various political institutions, such as parties, government agencies, or the electoral process. It has in the main left to the political philosopher the larger concern with the relations of the total political system to society as a whole.
We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capita. Once the effect of institutions is controlled for, countries in Africa or those closer to the equator do not have lower incomes. (JEL O11, P16, P51).
THIS STUDY of the political culture of democracy had its inspiration some thirty years ago in the Social Science Division of the University of Chicago. Much of what now goes under the name of the behavioral approach to the study of politics originated there in the period between the wars. It is a tribute to the vision of the men who created this leaven that it has taken three or four decades for their conception of political science to become a common possession. In particular, this study owes its inspiration to the work of Charles E. Merriam. His Civic Training series formulated many of the problems with which this study is concerned, and his New Aspects of Politics suggested the methods that have been used in its execution.
Studies the cultural, psychological, and moral conditions of political, social, and other organizations in a Southern Italian village. Interviews and TATs are used to examine the ethos of peasantry. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Using annual data on nine manufacturing sectors of 18 OECD countries, the article studies the implications of market structure for cross-country relative price variability. It is found that, in accordance with predictions from a standard markup pricing model, reductions in market competition, along with increased nominal exchange rate volatility, are associated with greater variability of cross-country relative prices. The market structure also has similar effects on components of cross-country relative price variability. The empirical findings are robust to the inclusion of various control variables and alternative sample specifications.
This paper presents a quarterly global model combining individual country vector error-correcting models in which the domestic variables are related to the country-specific foreign variables. The global VAR (GVAR) model is estimated for 26 countries, the euro area being treated as a single economy, over the period 1979–2003. It advances research in this area in a number of directions. In particular, it provides a theoretical framework where the GVAR is derived as an approximation to a global unobserved common factor model. Using average pair-wise cross-section error correlations, the GVAR approach is shown to be quite effective in dealing with the common factor interdependencies and international co-movements of business cycles. It develops a sieve bootstrap procedure for simulation of the GVAR as a whole, which is then used in testing the structural stability of the parameters, and for establishing bootstrap confidence bounds for the impulse responses. Finally, in addition to generalized impulse responses, the current paper considers the use of the GVAR for ‘structural’ impulse response analysis with focus on external shocks for the euro area economy, particularly in response to shocks to the US. Copyright © 2007 John Wiley & Sons, Ltd.
Countries with better institutions and countries that trade more grow faster. Countries with better institutions also tend to trade more. These three stylized facts have been documented extensively. Here we investigate the partial effects of institutions and trade on growth. We argue that cross-country regressions of the log-level of per capita GDP on instrumented measures of trade and institutional quality are uninformative about the relative importance of trade and institutions in the long run, because of the very high correlation between the latter two variables. In contrast, regressions of changes in decadal growth rates on instrumented changes in trade and changes in institutional quality provide evidence of a significant effect of trade on growth, with a smaller role for improvements in institutions. These results are suggestive of an important joint role for both trade and institutions in the very long run, but a relatively larger role for trade over shorter horizons.
Paternalism, merit goods and specific egalitarianism are concepts we sometimes meet in the literature. The thing in common is that the policy maker does not fully respect the consumer sovereignty principle and designs policies according to some other criterion than individuals' preferences. Using the self-selection approach to tax problems developed by Stiglitz [Stiglitz, J.E., 1982. Self-selection and Pareto-efficient taxation. Journal of Public Economics 17, 213–240] and Stern [Stern, N.H., 1982. Optimum taxation with errors in administration. Journal of Public Economics 17, 181–211], the paper provides a characterization of the properties of an optimal redistributive mixed tax scheme in the general case when the government evaluates individuals' well-being using a different utility function than the one maximized by private agents.
Does economic development depend on geographic endowments like temperate instead of tropical location, the ecological conditions shaping diseases, or an environment good for grains or certain cash crops? Or do these endowments of tropics, germs, and crops affect economic development only through institutions or policies? We test the endowment, institution, and policy views against each other using cross country evidence. We find evidence that tropics, germs, and crops affect development through institutions. We find no evidence that tropics, germs, and crops affect country incomes directly other than through institutions, nor do we find any effect of policies on development once we control for institutions.
In this paper, we put the trade effect of the euro in historical perspective. Using a data set that includes 22 industrial countries from 1948 to 2003, we find strong evidence of a gradual increase in trade intensity between European countries over time. Once we control for this trend in trade integration, the euro's impact on trade disappears. Moreover, a significant part of the trend in European trade integration is associated with measurable policy changes in areas such as exchange rate policy and institutional integration.
We study the military draft as a form of intergenerational redistribution, taking into account endogenous human capital formation. Introducing the military draft initially benefits the older generation while it harms the young and all future generations. As it distorts human capital formation more severely than an equivalent intergenerational transfer using public debt or pay-as-you-go pensions, the draft can be abolished in a Pareto-improving way if age-dependent taxes are available. In the absence of age-specific taxes, the political allure of the draft can be explained by the specific intergenerational incidence of its costs and benefits.
This paper discusses the need and scope for an active fiscal stabilization policy. It is argued that the effectiveness of fiscal policy as a short run stabilizer does not depend on the long run multipliers of (balanced budget) fiscal policies. To the extent that activity can be affected by aggregate demand in the short run, there is a case for a fiscal stabilization policy in terms of temporary variations in taxes or public consumption contingent on the state of the economy. The effectiveness of fiscal policy is supported by empirical evidence. However, an appropriate policy intervention depends both on the nature of the shock and the structure of the economy. There are thus fundamental information problems in pursuing discretionary fiscal policies on top of political economy concerns, and fiscal fine-tuning is not to be recommended. Automatic stabilizers do not to the same extent suffer from these problems, but their strength is not by design but the net result of other policy considerations. Hence, there is a need to consider the structure and size of automatic stabilizers.
This paper evaluates the importance of property rights institutions', which protect citizens against expropriation by the government and powerful elites, and contracting institutions', which enable private contracts between citizens. We exploit exogenous variation in both types of institutions driven by colonial history, and document strong first-stage relationships between property rights institutions and the determinants of European colonization (settler mortality and population density before colonization), and between contracting institutions and the identity of the colonizing power. Using this instrumental variables strategy, we find that property rights institutions have a first-order effect on long-run economic growth, investment, and financial development. Contracting institutions appear to matter only for the form of financial intermediation. A possible interpretation for this pattern is that individuals often find ways of altering the terms of their formal and informal contracts to avoid the adverse effects of contracting institutions but are unable to do so against the risk of expropriation.
This paper analyzes a model in which individuals care about both consumption (intrinsic utility) and social status. Status depends on public perceptions about an individual's predispositions rather than on the individual's actions. However, since predispositions are unobservable, actions signal predispositions and therefore affect status. When status is sufficiently important relative to intrinsic utility, many individuals conform to a rigid standard of behavior, despite heterogeneous intrinsic preferences. When status is relatively unimportant, no conformity emerges. The model produces both customs and fads, and it suggests an explanation for the development of multiple subcultures with distinct norms. Copyright 1994 by University of Chicago Press.
As measured by the pace of city growth in western Europe from 1000 to 1800. absolutist monarchs stunted the growth of commerce and industry. A region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government. This might be explained by higher rates of taxation under revenue-maximizing absolutist governments than under non-absolutist governments. which care more about general economic prosperity and less about State revenue.
The prevalence of shirking within a large Italian bank appears to be characterized by significant regional differentials.
In particular, absenteeism and misconduct episodes are substantially more prevalent in the south. We consider a number of
potential explanations for this fact: different individual backgrounds; group-interaction effects; sorting of workers across
regions; differences in local attributes; different hiring policies; and discrimination against southern workers. Our analysis
suggests that individual backgrounds, group-interaction effects, and sorting effects contribute to explaining the north-south
shirking differential. None of the other explanations appears to be of first-order importance.
Output per worker varies enormously across countries. Why? On an accounting basis our analysis shows that differences in physical capital and educational attainment can only partially explain the variation in output per worker-we find a large amount of variation in the level of the Solow residual across countries. At a deeper level, we document that the differences in capital accumulation, productivity, and therefore output per worker are driven by differences in institutions and government policies, which we call social infrastructure. We treat social infrastructure as endogenous, determined historically by location and other factors captured in part by language. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology
This paper presents evidence that “social capital” matters for measurable economic performance, using indicators of trust
and civic norms from the World Values Surveys for a sample of 29 market economies. Memberships in formal groups—Putnam's measure
of social capital—is not associated with trust or with improved economic performance. We find trust and civic norms are stronger
in nations with higher and more equal incomes, with institutions that restrain predatory actions of chief executives, and
with better-educated and ethnically homogeneous populations.