We are delighted to present this special issue of the Journal of the European Economic Association, in honor of its 20th anniversary. This is an important milestone in the history of the journal, and an opportunity to reaffirm the standards of rigor and excellence that animate its editorial principles. From its early days, the founders of the JEEA embraced the strictest of criteria for selecting papers that advance the frontier of economic science, with the explicit goal of making the JEEA a “top six” journal—or better!
The standing attained by the journal in its first twenty years owes to the vision of its founders—prominent leaders of the European Economic Association at the time of the journal's founding in 2003–including its past presidents Jean Tirole, Peter Neary, Torsten Persson and Richard Blundell. It also owes a great debt of gratitude to its past editors. This includes its past managing editors: Xavier Vives (2003–2008), Fabrizio Zilibotti (2009–2014), Juuso Välimäki (2015–2018) and Imran Rasul (2019–2022); as well as its past editors: Marios Angeletos, Orazio Attanasio, Dirk Bergemann, Patrick Bolton, Fabio Canova, Stefano DellaVigna, Jordi Galí, Nicola Gennaioli, Paola Giuliano, Bård Harstad, Alan Krueger, Dirk Krueger, Claudio Michelacci, Daniele Paserman, and Roberto Perotti.
The thirteen papers in this issue were chosen by the current editorial team as representative of breadth and quality of research published in the journal in its first twenty years. The papers included here span diverse fields, from economic theory to macroeconomics, labor economics, development economics, political economy and international economics—a testament to the JEEA’s standing as a leading general audience journal. They include papers by authors whose early careers were greatly enhanced by publishing in JEEA; papers coauthored by three winners of the Nobel Prize in economics—and, perhaps, some future ones; papers by scholars who took risks with bold new ideas in their respective fields—risks that paid off given the influence that these papers attained in the profession, as measured by the many thousands of citations that they garnered.
To let the authors describe in their own words the impact of their papers, and the process that led to their publication in the JEEA, we solicited from them short introductions, to provide these scholars with an opportunity to look back at how their work fared in the marketplace of ideas after publication. These remarkable essays include anecdotes on the journey of discovery involved in economic research; narratives on the process of conducting research and on the experience of publishing in the JEEA; stories on the role of editors and referees in taking risks with new directions in economics. They provide an opportunity to reflect on the qualities that make for great papers. We hope that the readers of the journal will find them informative, useful and entertaining.
We conclude by reaffirming the JEEA’s commitment to publishing credible, rigorous, and excellent research in economics. In the coming months we will be backing this commitment with some actions: the creation of a replication team led by a data editor, to systematically check the empirical work that is forthcoming in the journal; the hiring of the very best scholars as the next generation of editors; a continued commitment to diversity within the sets of editors and authors; and continued efforts to maintain an editorial process that is efficient and adheres to the highest standards of fairness and rigor. We hope that the members of the EEA—and the broader community of economists around the world—will continue to support our efforts to keep the JEEA within the ranks of the very best general audience journals in economics.
Pierre Dubois, Jonas Hjort, Guido Lorenzoni, Nicola Pavoni, Giovanni Peri, Vasiliki Skreta, Romain Wacziarg and Andrea Weber
Note:
1One of the papers in this special issue was coauthored by a current member of the editorial team – Giovanni Peri; needless to say, the selection was made without his input and participation – and reflects the very high impact that this paper achieved over the years since its publication, as measured by citation counts in Web or Science and Google Scholar.
Jean-Charles Rochet and Jean Tirole introduce their article, “Platform Competition in Two-Sided Markets” (2003)
While concerns about the business model of Tech giants in the age of AI are still acute, the early years of the XXIst century were already an exciting period for economic research on platforms, especially for us in Toulouse. Following the creation of the Institut d‘Économie Industrielle (the precursor of the Toulouse School of Economics), we had developed contacts with several industries exhibiting two-sided-market features such as payments, banking, internet and telecoms. For example, we thereby discovered the intriguing features of the payment service industry (which had not yet attracted much interest from academic research) and started working on the price structure in payment card networks. This led us to publish several academic papers (including Rochet-Tirole 2002) which ultimately had some influence on regulatory decisions, especially in the EU.
But we soon realized that the same preoccupation of payment service providers, namely finding an appropriate price structure in order to internalize externalities between the two sides of the payment market, also applied to a wide range of flourishing industries: Internet platforms, operating systems, media, video games,… There also, the price structure between the two sides of the markets tended to be very skewed. Typically, one side pays a high price, while the other side faces a zero or even sometimes negative price, something that can never happen in standard one-sided industries.
Building on the previous literature of the 80 s on network effects in one-sided industries (e.g. Katz- Shapiro 1986), and contemporaneous papers on matchmakers (Caillaud-Jullien 2003), Internet gatekeepers (Baye-Morgan 2001), advertising (Anderson-Coate 2005), access pricing (Jeon et al. 2003, Laffont et al. 2003), we decided to study systematically the determination of prices in platform industries, as a function of the industry structure, the dominant type of externalities and pricing (membership or usage). This was largely an uncharted territory. Beyond the classic determination of the price level, conditioned on market power as in a one-sided industry, the brand-new questions concerned the price structure that emerges and whether it is close to the socially optimal one. Armstrong and we pushed the general paradigm further in 2006. And of course, many exciting papers have been written by colleagues since.
Today, a majority of top market caps and most successful startups are multisided platforms. Yet there are still a number of things we do not know, at a time when regulators around the world are thinking at how to address the fairness of access by merchants, content providers and advertisers to platforms and the contestability of established platforms (e.g. Digital Market Act in Europe, American Innovation and Choice Online Act in the US). The literature keeps flourishing, on both the theory and the empirical sides.
In retrospect, we benefited from the timing of our paper as well perhaps its intended generality; as is often the case with scientific discoveries, many researchers were developing similar ideas at the time. In any case, we were very happy to see that our approach received much attention (7134 Google citations at the time of this writing) and was soon followed by a flurry of influential papers and policy-makers attention.
As a final anecdote, which may reassure young researchers who sometimes experience painful rejections, our paper had initially been rejected by a top-5 journal. In spite of very favorable referee reports, the editor decided that “the topic was too narrow” for a generalist journal and rejected the paper.
Jean was president of the EEA in 2001. Following a discontent with the business model associated with the EER, he, together with the EEA 1st and 2nd VPs (Peter Neary, Torsten Persson) and later the 2004 president (Richard Blundell), had just created a new journal for the association, the Journal of the European Economic Association. Jumpstarting the JEEA required preparing two invited issues while launching an open call for papers. We submitted the paper to JEEA, and it received a more positive treatment from the Editorial Team (for transparency, Jean was part of the team! But needless to say, he did not handle our paper). We are delighted to have done our bit and contributed to the impact of the newly born JEEA, which thanks to its excellent editors later became today of one of the very top economic journals.
Frank Smets and Raf Wouters introduce their article, “An Estimated Dynamic Stochastic General Equilibrium Model of the Euro Area” (2003)
The late 1990 s were the high days of what Marvin Goodfriend and Bob King called the New Neo-classical Synthesis (Goodfriend and King 1997) and what is now commonly known as the canonical New Keynesian model (Woodford 2003 and Galí 2008). This model was seen as a very useful conceptual framework to understand the newly established inflation targeting regimes. A part of the research agenda at the time focused on developing it into a practical, empirical model that central banks could use to understand the shocks driving the outlook for inflation and derive the implications for the optimal monetary policy response (Rotemberg and Woodford 1997).
We started collaborating on this agenda in the late 1990 s, when we were preparing a paper on the exchange rate channel in the monetary transmission mechanism in Germany for a conference organized by the Dutch central bank (Fase and Keyzer 1999). Raf had been tinkering with DSGE models calibrated to the Belgian economy, whereas Frank had been working on monetary transmission using structural VAR models. In the paper that was eventually published in De Economist (Smets and Wouters 1999), we brought these two areas of expertise together and did an ocular form of impulse response function matching, comparing the impulse responses of a monetary policy shock in an identified VAR for Germany with those in an open-economy sticky-price/sticky-wage DSGE model calibrated to the German economy. Larry Christiano and Chris Sims also presented papers at this conference (Christiano and Gust 1999 and Sims 1999). Discussions with both sowed the seeds of our subsequent work. Larry mentioned a project with Marty Eichenbaum and Charly Evans that formalized impulse response matching for the estimation of a medium-scale New Keynesian DSGE model for the United States. Chris, who presented his pre-scient paper on the lack of fiscal foundations in EMU, emphasized the importance of treating the DSGE model as a complete probability model and estimating it accordingly as in his work with Eric Leeper (Leeper and Sims 1994 and Sims 2005).
These conversations encouraged us to continue our collaboration and try to estimate a medium-scale New Keynesian DSGE model for the newly established euro area, a somewhat heroic undertaking as the euro had just been introduced and we had to rely on aggregated economic series from the eleven founding member states (Fagan, Henry and Mestre 2001). The ECB’s newly established Directorate General Research under the leadership of Vitor Gaspar and Ignazio Angeloni provided a very supportive environment for this cooperation, as Frank had just moved from the BIS to the ECB and Raf visited the ECB from the National Bank of Belgium from October 2000 to November 2001. To help us develop and refine our New Keynesian DSGE framework we invited Mike Woodford and Larry Christiano to give a series of lectures on New Keynesian DSGE models. At the same time, we explored system-wide estimation of medium-scale versions of these models by adding different types of shocks. While productivity, government spending and monetary policy shocks were quite common in the RBC literature, other shocks such as preference shocks or price and wage mark-up shocks were non-standard.
Initially, we struggled to get reasonable maximum likelihood estimates of our euro area model (See also Leeper and Sims 1994). This struggle was apparent in the first draft of the paper that we presented at a workshop that we organized at the ECB on 5–6 June 2001. In this draft, we combined full-system maximum likelihood methods with minimizing the distance between selected data and model-generated moments, which allowed us to stabilize the maximum likelihood estimates. At the workshop, Larry and Marty presented their future 2005 Journal of Political Economy paper which formalized the impulse response matching method (Christiano, Eichembaum and Evans (CEE) 2005) and Peter Ireland presented a paper with the maximum likelihood estimation of a four equation New Keynesian model with money. In the policy panel the partial convergence between traditional macro-econometric modelling and modern DSGE models with a richer dynamic structure was very much welcomed.
However, the mixture of maximum likelihood and method of moments estimation in our paper and the resulting lack of separation between estimation and validation was criticized. This time, a discussion with Fabio Canova led to a break-through. He recommended taking a Bayesian approach as to some extent what we were trying to do with our ad-hoc loss function was to impose priors on the distribution. He suggested that we contact Frank Schorfheide, a former student of Chris Sims, who was using Bayesian methods to estimate small-scale DSGE models. After the workshop we reached out to Frank. He taught us the principles of Bayesian econometrics and the Monte-Carlo-Markov-Chain algorithms that could be used to evaluate posterior distributions. He also generously provided us his codes.
Our discussants at the workshop, Harris Dellas and Stefano Siviero, questioned the number and the identification of the shocks and, in particular, the “ad hoc” nature of the mark-up shocks. On this we stuck to our guns. We needed enough sources of variation to capture the stochastic features of the seven macroeconomic observables we were interested in modelling. The alternative of adding measurement error to mop up this variation was in our view not very useful for a model that was intended to be used in a policy setting. In addition, as the much-liked productivity shock was nothing more than the productivity parameter going stochastic, we did not see any loss of “purity” in making other structural parameters (like the elasticity of substitution between varieties of goods in a monopolistic market) also stochastic. Now it is very common to explore a great variety of “structural” shocks in this spirit.
With the new Bayesian methodologies, we continued to work on refining our euro area model and were able to have a set of robust results that we presented at the 25th International Seminar on Macroeconomics (ISOM) organized by Lars Svensson and Jim Stock on 14–15 June 2002 at the ECB in Frankfurt. One of our discussants, Jordi Galí, contrasted the quite precise estimation of the degree of stickiness in our approach with the imprecise estimates in CEE (2005), highlighting the benefits of full-system estimation. The other discussant, Noah Williams, while questioning some of the micro foundations (such as the time-dependent nature of the price rigidities), also suggested using the Bayesian methodology to test more systematically for various features of the transmission mechanism and explore the degree of uncertainty coming from the estimation. These and many other suggestions allowed us to improve the paper, which, under the co-editorship of Jim Stock, was ultimately accepted for publication in the newly established Journal of the European Economic Association.
References
Christiano, L.J. and C.J. Gust (1999). “Taylor rules in a limited participation model,” De Economist, 147, 437–460, December 1999.
Christiano, L.J., M. Eichenbaum and C. Evans (2005). “Nominal rigidities and the dynamic effects of a shock to monetary policy,” Journal of Political Economy, Vol. 113, No. 1 (February 2005), pp. 1–45.
Fagan, G., J. Henry and R. Mestre (2001). “An Area-Wide Model (AWM) for the euro area,” ECB Working Paper 42, January 2001.
Fase, M.M.G. and M.A. Keyzer (1999). “Introduction,” De Economist 147,411–413, December 1999.
Galí, Jordi (2008). Monetary Policy, Inflation and the Business Cycle: An Introduction to the New Keynesian Framework and its Applications, Princeton University Press, (Princeton, NJ).
Goodfriend, Marvin and Robert G. King (1997). “The New Neoclassical Syntesis and the role of monetary policy,” NBER Macroeconomics Annual 1997, Ben S. Bernanke and Julio J. Rotemberg (Eds), 231–283, Cambridge and London: National Bureau of Economic Research.
Leeper, Eric and Christopher A. Sims (1994). “Toward a modern macroeconomic model usable for policy analysis,” NBER Macroeconomics Annual 1994, Volume 9, pages 81–140, National Bureau of Economic Research, Inc.
Rotemberg, Julio J. and Michael Woodford (1997). “An optimization-based econometric framework for the evaluation of monetary policy,” NBER Macroeconomics Annual 1997, Ben S. Bernanke and Julio J. Rotemberg (Eds), 297–361, Cambridge and London: National Bureau of Economic Research.
Rudebusch, Glenn and Tao Wu (2002). “Macroeconomic models for monetary policy,” FRBSF Economic Letter, 2002–11, April 2002.
Sims, C.A. (1999). “The precarious fiscal foundations of EMU,” De Economist, 147,415–436, December 1999.
Sims, C.A. (2006). “Improving monetary policy models,” http://sims.princeton.edu/yftp/CBModels/CBModelsPaper.pdf
Smets, Frank and Raf Wouters (1999). “The exchange rate and the monetary transmission mechanism in Germany,” De Economist, 147,489–521,1999.
Smets, Frank and Raf Wouters (2003). “An estimated dynamic stochastic general equilibrium model of the euro area,” Journal of the European Economic Association, 1:5, September 2003.
Woodford, Michael (2003). Interest and Prices: Foundations of a Theory of Monetary Policy, Princeton University Press, (Princeton, NJ).
Michael Kremer, Nazmul Chaudhury, F. Halsey Rogers, Karthik Muralidharan and Jeffrey Hammer introduce their article, “Teacher Absence in India: A Snapshot” (2005)
Origins of the research
"Teacher Absence in India” was inspired by the new strand of empirical research on improving service delivery that emerged in the late 1990 s and early 2000s—most notably, by the PROBE report on basic education in India (PROBE Team 1999), Jeff and Nazmul's research on absence of doctors in Bangladesh (Chaudhury and Hammer 2003), and the school-level randomized evaluations by Michael and co-authors (e.g. Glewwe, Ilias, and Kremer 2010; Kremer, Miguel, and Thornton 2009). The central questions of that literature were: what is the quality-of-service delivery in education and health in low- and middle-income countries, why isn’t it better, and how can it be improved?
For the origins of this article, we are indebted to former World Bank regional chief economist Shanta Devarajan, who catalyzed it in 2002 as background research for the influential World Development Report 2004: Making Services Work for Poor People, which he led. At the time, Michael was a visiting researcher at the World Bank; Halsey, Jeff, and Nazmul were researchers on the Bank's new research team on public service delivery; and Karthik was a graduate student of Michael's.
For the WDR, the team was looking for a simple objective metric of service delivery that could be measured in a consistent way across diverse settings. Absence of service-delivery providers fit the bill well. It also had the advantage of being viscerally understood by diverse stakeholders—not just political and bureaucratic leaders, but also activists and citizens more generally.
The team launched an ambitious multi-country project, of which the India research published in the JEEA was a part, to measure provider absence. The project took the idea of systematically measuring absence from earlier research but scaled it up dramatically and made it multisectoral. That multi-country work was summarized in the Journal of Economic Perspectives (Chaudhury, Hammer, Kremer, Muralidharan, and Rogers 2006).
India study
The India part of the multi-country research had an especially big impact. This was thanks to Karthik's observation after initial fieldwork that each Indian state was the size of a major country, and that the cost of covering 20 states was the same as covering 3–4 countries. We would therefore get much more bang for the buck by covering India in much more depth. This audacious idea of scaling up the India country study to 20 times as large as we first planned—and the ability to make that work within a reasonable budget—greatly increased its impact. The World Bank India office made this possible by facilitating the necessary approvals from both the central and state governments.
This 20-state model allowed both interstate comparisons and more comparisons of “country-sized” jurisdictions. It also helped highlight the very large variation in service-delivery quality across Indian states: teacher absence ranged from 15% in Maharashtra to 42% in Jharkhand. Being able to show these differences in a color-coded map proved surprisingly powerful in research and policy discussions.
The strong negative correlation between absence and GDP per capita, both across Indian states and across countries (seen in the companion JEP paper), also helped to highlight the fact that weak governance may be a key constraint to translating spending into outcomes in LMIC settings. It also suggested that there may be complementarity between investing in additional resources and improving governance in these settings. But the data also showed that even within the same national system, some jurisdictions could do much better than others at the basics of governance. We also found a negative relationship between GDP per capita and health worker absence. However, the residuals from the regressions of teacher absence on GDP/capita and health-worker absence on GDP/capita were strongly positively correlated. This suggests that although absence is correlated with income, there is meaningful variation in governance across states even after adjusting for income.
Impacts in India
This study attracted substantial and sustained media attention, in India and elsewhere. Initially, results were cited widely as coming from a World Bank study, or a study by Michael or Karthik. Then over time—in perhaps the best evidence of lasting impact—the core findings began to appear in the media without attribution, simply as widely accepted facts: “25% of teachers are absent.” This helped influence the policy debate on India's education challenges.
The article opened the door to years of follow-on research on potential solutions in Andhra Pradesh and beyond. The AP education secretary participated in the first India presentation of the paper (in January 2004), and he expressed interest in exploring different potential solutions to the problem. The result was multiple large-scale experimental evaluations on education, including Muralidharan and Sundararaman (2011) on teacher performance pay, Das and others (2013) on school grants, and Muralidharan and Sundararaman (2015) on school vouchers.
Another direct result of this paper was the follow-on absenteeism research 7–8 years later published as “Fiscal Cost of Weak Governance” (Muralidharan, Das, Holla, and Mohpal 2017). That work went back to a subset of the sample covered in the 2002–03 India fieldwork, and it found using panel data that the absence problem was nearly as severe nationally. Reducing pupil-teacher ratios hadn’t improved the problem, in part because absence of existing teachers appeared to increase in response to having more teachers. But greater frequency of inspections was correlated with lower absence, as we had suggested in the original JEEA article. This follow-up paper helped highlight that addressing “governance” issues was at least as important as simply spending more money on education. Finally, the hypothesis that there may be complementarities between inputs and incentives in education in LMICs was confirmed experimentally (in Tanzania) by Mbiti, Muralidharan, Romero, Schipper, Manda, and Rajani (2019).
Global impacts
More broadly, the JEEA 2005 and JEP 2006 papers became foundational papers in the literature on improving governance and service delivery in low- and middle-income countries. While the papers were descriptive and based on correlation, their main value was in presenting key facts on weak governance, which led to a large follow-up literature testing ways of reducing absence and of improving outcomes. They contributed (along with the work of JPAL, the WDR 2004, and others) to a major shift in the global development discourse in the first decade of the century: the shift away from looking primarily at budget decisions by governments and households, and toward focusing much more on how spending translated into outputs, behaviors, and outcomes at school level. At the World Bank, where three of the authors worked, this research has inspired many similar observation-based surveys of service-delivery quality (including teacher absence) and outcomes; data are now available for more than 30 countries, several with multiple rounds of data. And subsequent World Development Reports have continued to delve deeper into the drivers of poor service delivery and outcomes (using teacher absence as a prominent example) and on how to overcome them (World Bank 2017, World Bank 2018). Many reviews of Michael's contributions after the Nobel announcement cited the provider absence work, indicating how influential it had been in shifting thinking in both the academic and policy worlds.
References
Chaudhury, Nazmul, and Jeffrey S. Hammer (2004). “Ghost doctors: absenteeism in rural Bangladeshi health facilities.” The World Bank Economic Review 18(3): 423–441.
Chaudhury, Nazmul, Jeffrey Hammer, Michael Kremer, Karthik Muralidharan, and F. Halsey Rogers (2006). “Missing in action: teacher and health worker absence in developing countries.” Journal of Economic Perspectives 20(1): 91–116.
Das, Jishnu, Stefan Dercon, James Habyarimana, Pramila Krishnan, Karthik Muralidharan, and Venkatesh Sundararaman (2013). “School inputs, household substitution, and test scores.” American Economic Journal: Applied Economics 5(2): 29–57.
Glewwe, Paul, Nauman Ilias, and Michael Kremer (2010). “Teacher incentives.” American Economic Journal: Applied Economics 2(3): 205–227.
Kremer, Michael, Edward Miguel, and Rebecca Thornton (2009). “Incentives to learn.” The Review of Economics and Statistics 91(3): 437–456.
Mbiti, Isaac, Karthik Muralidharan, Mauricio Romero, Youdi Schipper, Constantine Manda, and Rakesh Rajani (2019). “Inputs, Incentives, and Complementarities in Education: Experimental evidence from Tanzania.” Quarterly Journal of Economics 134(3): 1627–1673.
Muralidharan, Karthik, and Venkatesh Sundararaman (2011). “Teacher performance pay: Experimental evidence from India.” Journal of Political Economy 119(1): 39–77.
Muralidharan, Karthik, and Venkatesh Sundararaman (2015). “The aggregate effect of school choice: Evidence from a two-stage experiment in India.” Quarterly Journal of Economics 130(3): 1011–1066.
Muralidharan, Karthik, Jishnu Das, Alaka Holla, and Aakash Mohpal (2017). “The fiscal cost of weak governance: Evidence from teacher absence in India.” Journal of Public Economics 145: 116–135.
PROBE Team (1999). Public Report on Basic Education in India. New Delhi: Oxford University Press.
World Bank (2003). World Development Report 2003: Making Services Work for Poor People. Washington: Oxford University Press.
World Bank (2017). World Development Report 2017: Governance and the Law. Washington: Oxford University Press.
World Bank (2018). World Development Report 2018: Learning to Realize Education's Promise. Washington: Oxford University Press.
Ritva Reinikka and Jakob Svensson introduce their article, “Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda” (2005)
In the fall of 2001, we were pre-piloting the new public expenditure tracking survey we planned to use to investigate the effects of the Uganda government's innovative anticorruption program—a newspaper campaign. One morning we ended up in a rural school in Kamuli District in Eastern Uganda. In most dimensions, this was a low-resource school. It lacked textbooks; even from a short distance, it was difficult to read anything written on the blackboard; and the buildings were dilapidated with cracks of varying severity. Nevertheless, the school's headmaster whom we interviewed was a very joyful and happy man (As an aside, during the interview there were two mice running around on the floor of the headmaster's office and one of us really is not very fond of mice. As a result, the interview took a somewhat strange form, with one of us at times standing on a chair!).
During the interview, we asked whether the headmaster was aware of the government's school grant program, and learned that not only was he aware of it, he was also very happy with the district office support in disbursing the funds the school was entitled to.
This surprised us. After all, we had seen no evidence that the school was receiving much funding and began to wonder if the headmaster was siphoning off some funds for his own purposes. So, we dug deeper and asked to see the accounts. The headmaster immediately lay our suspicion to rest: he produced detailed accounts of the school's finances and handed over the booklet produced by district offices outlining the working of the capitation grant program.
The booklet looked similar to many others we had seen before, both in the district headquarters and in other schools. It contained text about the program, and what funds could be used for, and it described the grant formula: 5,000 Uganda shillings (USh) for each student in grades P1–P3 and 8,100 USh for each student in grade P4–P7.
But looking closer in the booklet we noted one major discrepancy—the last “0” had been dropped from the per-student amount; that is, the grant formula in the headmaster's booklet prescribed 500 USh per student in P1–P3 and 810 Ush per student in P4–P7. And that is exactly what the school got—a tenth of what it was supposed to receive! A happy headmaster and extensive local capture can thus go hand-in-hand, when the key stakeholder does not have the correct information.
To us, this episode really illustrated the power of information, and how easy it is to fool someone in a setting where the flow of information goes from the agency that implements the program (i.e. district officers) as well as monitors its success. That is, it raises the question: Quis custodiet ipsos custodes? Or who monitors the monitor? The bottom-up approach that guided the design and implementation of the newspaper campaign in Uganda was designed to address precisely this issue. Unfortunately, the headmaster in the rural school in Kamuli we visited did not have regular access to newspapers. But we at least we told him about the error in the grant rule!
We think the research highlighted in our JEEA article had some impact in pushing researchers and policymakers to place more focus on issues related to service delivery. We also know that many countries and their development partners across the world have carried out public expenditure tracking surveys and that several countries in Africa replicated the Ugandan innovation of publishing transfers regularly in the main newspapers. In fact, one morning several years ago one of us was visiting Sierra Leone and picked up the main national paper for breakfast. In it was a familiar looking two-page public announcement of central government transfers to local governments!
Alberto Alesina, Silvia Ardagna, Giuseppe Nicoletti, and Fabio Schiantarelli introduce their article, “Regulation and Investment” (2005)
Alberto Alesina had the wonderful ability of bringing together people to explore and write about a wide range of issues of relevance for economic policy. The paper Regulation and Investment, that appeared in the 2005 issue of the Journal of the European Economic Association, is an example of his capacity to play this role.
In 2002 Alberto, Silvia Ardagna, Roberto Perotti and Fabio Schiantarelli had published a paper exploring how public spending and taxes could adversely affect investment through their impact on firm's profitability. Not one to stay idle, Alberto quickly signed up for the Harvard macro seminar series to present the next, yet to be written, paper on the effect of product market regulatory reforms on investment. The need to actually do the work for the promised paper presentation was the genesis of our paper on this topic.
The question that motivated our work was whether Italy and other European countries exhibited lower real GDP growth in the 1990’s compared to the US because of lower investment due, in part, to the nature of product market regulation, characterized by high barriers to entry and a dominant role of public enterprises. As argued in the paper, the answer concerning the effect of regulation on investment is ambiguous as a matter of theory. Ultimately, it is an empirical issue. Our hope was to gain insights from two decades of regulatory reforms implemented by many countries in network industries (such as transportation, utilities and communication). This represented an extraordinarily useful policy experiment to assess empirically the impact of regulation on investment.
It was essential for the paper to come into existence that Giuseppe Nicoletti had been leading a team of researchers at the OECD focused on developing a new data set that provided time-varying measures of regulation for network industries covering many OECD countries since the mid 70’s. Giuseppe and his colleagues had already shown using these new data that reforms promoting liberalization of entry and privatization had a positive effect on both employment and productivity. Joining forces with Boston-based researchers to study the role of these reforms for investment was natural in view of the common concerns for insufficient action in Europe, and especially in Italy, to make markets more dynamic and competitive at a time of rapid technological change.
This was the beginning of a very fruitful collaboration between the two sides of the Atlantic, the two sides of the Charles River (Boston College and Harvard) and three sides of the economics profession (a graduate student, two professors, and a leading senior researcher in one of the main international organizations). As an aside, it is worth noting that the Boston academic ecosystem was instrumental in generating the conditions for this paper. Boston had long been a destination for Italian economists (Mario Draghi and Francesco Giavazzi are the first to complete the Ph.D. at MIT), initially attracted by the presence and support of Franco Modigliani who had found shelter in the US from the antisemitic persecutions by the Fascist Regime in the late 1930’s but had maintained closed connections with Italy. Facilitated by the earlier arrivals in the 1970’s, subsequent cohorts of talented students continued the intellectual migration from Italy to Boston, consolidating this transatlantic connection. This flow included Alberto Alesina (who graduated from Harvard in 1986 and was brought back there as a professor shortly thereafter) and, later, Silvia Ardagna, who graduated in 2000 from Boston College, where Fabio Schiantarelli (who had moved to BC from the UK) and Alberto co-chaired her dissertation committee.
After working on the topic for months and months, and after running every possible robustness check, we submitted the paper to the JEEA in view of its relevance for European policymaking. The smooth revision process greatly enriched the paper that was published in 2005. Its selection for this special 20-year anniversary issue is a great honour for us. Our evidence shows that streamlining and modernizing network industries regulation, which includes (but is not limited to) liberalizing entry where possible and reducing the role of dominant public enterprises, leads to higher investment. The OECD measures of regulation have subsequently been extended to cover more network sectors for 33 countries over the period 1975–2018. Our main results have been shown to hold for aggregate investment using this larger dataset (Egert 2018).
Recent research has focused on the regulation-investment nexus in single industries (telecoms or energy) or on how regulation affects the accumulation of specific assets (ICT or intangibles). The latter research is particularly relevant in view of the fast digitalization of our economies, which could have deep implications for the way regulation affects investment. As shown by the recent flurry of legislative activity in several OECD countries, digitalization and the increasingly pervasive role of data assets are spurring complex regulatory design and implementation initiatives, whose consequences for investment will eventually have to be evaluated empirically.
The experience of four decades of regulatory reform has also shown that, besides its effects on investment, other collateral effects are important in assessing the impact of network industries liberalisation, privatization and restructuring – including the availability and affordability of basic services (e.g. in the transport sector) and the dangers of unanticipated increases in market power. These effects may affect welfare and possibly feed back into investment dynamics itself.
Moreover, the world has changed fast over the most recent past and concerns of policymakers have shifted accordingly. The financial crisis, climate change, COVID-19 and geopolitical tensions have lessened attention toward growth-oriented market reform and heightened focus on income distribution, inclusion, the digital and green transitions, and the reshaping of global trade and supply networks. Yet, network industries and their development (inter alia through appropriate infrastructure investment) remain central to most of these new concerns and, in this sense, we are convinced that the findings in our paper retain relevance for policymaking.
References
Égert, B. Regulation, Institutions and Aggregate Investment: New Evidence from OECD Countries. Open Econ Rev 29,415–449 (2018). https://doi.org/10.1007/s11079-017-9449-9
Daron Acemoglu, Philippe Aghion, and Fabrizio Zilibotti introduce their article, “Distance to Frontier, Selection, and Economic Growth” (2006)
The article “Distance to Frontier, Selection, and Economic Growth” (hence-forth, DTF) explores the dynamics of economic growth in developing and emerging economies. It posits that productivity growth can be attributed to two primary factors: innovation and imitation of technologies from the global technology frontier. During the initial stages of development, economies can experience rapid growth by investing in physical capital and adopting existing technologies from more advanced nations. However, as development progresses, the potential for imitation diminishes, and sustained growth becomes contingent upon the innovative capacity of firms.
While this process is spontaneous, institutions can play an important role in facilitating or hindering growth. During the early stages of development, economic policies should focus on promoting investments, overcoming credit and contractual frictions, and addressing coordination issues. In this context, industrial policy emerges as a traditional tool to achieve these objectives. However, as economies advance, policy priorities need to shift towards emphasizing the accumulation of human capital, fostering fair competition, nurturing financial development, and more generally transitioning to an innovation-driven strategy. Failure to adapt institutions accordingly can result in countries getting stuck in middle-income nonconvergence traps. This entrapment often arises from politico-economic mechanisms where insider firms, having received government protection during the investment-led phase, lobby to maintain their privileged positions.
In 2002, Philippe and I were colleagues at University College London. During a visit to MIT, the three of us embarked on laying the initial groundwork for the model. This gathering marked our first rendezvous in a decade, harking back to the time when Daron and I were students attending the captivating growth lectures delivered by a young Prof. Aghion at the LSE. It was an exciting time, coinciding with the publication of Aghion and Howitt (1992), which revolutionized growth theory. The seed idea of DTF garnered both support and criticism. Our primary focus revolves around economic and institutional transitions and the crucial role of liberalization at critical junctures in fostering growth. However, some economists interpreted our message as potentially advocating for active policy interventions that could lead to government failures in less developed economies. This viewpoint clashed with the prevailing Washington consensus paradigm of the time. Interestingly, the response to our work was generally more favorable in Europe compared to North America. Throughout the process, we were fortunate to experience a smooth and efficient editorial journey at JEEA, and we truly appreciated the valuable guidance provided by the editor, as well as the insightful suggestions from a specific referee.
Each of us, the three coauthors, has independently expanded upon the original idea of DTF. Daron's emphasis has been on the joint dynamics of institutions and economic development (e.g. Acemoglu and Robinson 2006 and 2019). Philippe, on the other hand, has extensively connected DTF with the neo-Schumpeterian growth theory, exploring areas like financial development (Aghion, Howitt, and Mayer-Foulkes 2005) and education policy (Vandennbusche, Aghion, and Meghir 2006).
The influence of the DTF framework on my own research regarding the economic development of China has been profound. China serves as a compelling case study that aligns well with the theory's principles. When we initiated the project, China was still a poor country, which had adopted an investment-driven growth strategy and promoted partial economic liberalization, as discussed in “Growing Like China,” (Song, Storesletten, and Zilibotti 2011). However, since 2012, China's pace of growth has slowed down, though it has remained strong despite the recurrent prophecies foreseeing its demise. In a subsequent study (Alder, Shao, and Zilibotti 2016), we investigated the impact of space-based industrial policies in China. This study highlights the significant role Special Economic Zones played in promoting economic growth as part of an investment-led growth strategy.
In my Presidential Address at the EEA Congress 2016 (Zilibotti 2017), I examine the beginning of China's economic slowdown and its connection to the challenging transition from imitation-led to innovation-led growth. In that presentation, I revisited the cross-country regressions conducted in the original DTF study, expanding the sample to include nineteen years of more recent data from 1995 to 2014. It was relieving to discover that the main empirical findings remained solid and were even strengthened by the inclusion of more recent years. The empirical evidence regarding the changing effects of barriers to market entry throughout the development process was consistent and robust. Moreover, I delved into the impact of R&D intensity and corruption in the public sector, which proved to be consistent with the predictions of our theory.
Recent research has moved to firm -level data. The imitation-versus-innovation framework naturally implies that highly productive firms possess a comparative advantage in innovation, while laggards are better placed to imitate. However, industrial policy can distort this pattern, particularly in countries like China, where the proximity of rms to the government plays an important role. The Chinese government has progressively embraced an innovation-led strategy by encouraging and supporting investments in R&D. But how effective is this strategy? This question forms the basis of my recent collaborative research in König et al. (2022).
In this recent study, we incorporate the concept of DTF into a model of random interactions and knowledge spillover across firms that we estimate. We make two key findings. Firstly, R&D investments significantly contribute to productivity growth at the rm level, which runs against a pervasive skepticism surrounding the significance of R&D and patent data for China. Secondly, we uncover substantial misallocation in R&D investments across firms. By comparing the performance of rms in mainland China with that of Taiwanese firms, we identify a significant productivity gap in R&D investment. We argue that misallocation stems from distortions which are attributable to industrial policy. Some less productive firms, particularly state-owned enterprises, engage in R&D despite lacking the economic rationale, while investment remains insufficiently low among the most productive firms. The results highlight the challenges associated with China's top-down approach to promoting innovation. Despite introducing certain reforms to the financial sector, establishing a grassroots innovation culture akin to that of Silicon Valley is still a pending issue.
In conclusion, DTF has sparked a vibrant intellectual debate, raising questions that continue to elicit contrasting opinions. In a world marked by deep divisions, where intellectual trends have oscillated between unwavering confidence in market forces and the call for a new wave of state capitalism, my conviction remains steadfast that policymaking should evolve and adapt in response to the ever-changing landscape of economic development.
References
Acemoglu, Daron, Philippe Aghion, and Fabrizio Zilibotti (2006). “Distance to Frontier, Selection, and Economic Growth.” Journal of the European Economic Association 4, 1: 37–74.
Acemoglu, Daron and James Robinson (2006). Economic Backwardness in Political Perspective. American Political Science Review 100, 1: 115–131.
Acemoglu, Daron and James Robinson (2019). The Narrow Corridor: States, Societies, and the Fate of Liberty. New York: Penguin Press.
Aghion, Philippe, and Peter Howitt (1992). “A Model of Growth Through Creative Destruction.” Econometrica 60, 2: 323–351.
Aghion, Philippe, Peter Howitt, and David Mayer-Foulkes (2005). “The Effect of Financial Development on Convergence: Theory and Evidence.” Quarterly Journal of Economics 120, 1: 173–222.
Alder, Simon, Lin Shao, and Fabrizio Zilibotti (2016). “Economic reforms and industrial policy in a panel of Chinese cities.” Journal of Economic Growth 21, 4: 305–349.
König, Michael, Zheng Song, Kjetil Storesletten, and Fabrizio Zilibotti (2022). “From Imitation to Innovation: Where Is all that Chinese R&D Going?” Econometrica 90, 4: 1615–1654.
Song, Zheng, Kjetil Storesletten, and Fabrizio Zilibotti (2011). “Growing Like China.” American Economic Review 101, 1: 196–233.
Vandenbussche, Jérôme, Philippe Aghion, and Costas Meghir (2006). “Growth, Distance to Frontier and Composition of Human Capital.” Journal of Economic Growth 11, 2: 97–127.
Zilibotti, Fabrizio (2017). “Growing and Slowing Down Like China.” Journal of the European Economic Association 15, 5: 943–988.
Jordi Galí introduces his article (co-authored with J. David López-Salido and Javier Vallés), “Understanding the Effects of Government Spending on Consumption” (2007)
I was honored to hear from the editorial team at JEEA that our paper “Understanding the Effects of Government Spending on Consumption” (Galí et al. (2007)), co-authored with David López-Salido and Javier Vallés, had been selected as one of the “most influential papers” published by that journal since its inception in 2003. If my records are not misleading, I must have been a co-editor at JEEA when we submitted the paper. Fortunately, the significant impact that the paper has had over the years vindicates its publication in JEEA as a decision based on the paper's intrinsic merits and not as an act of kindness to a fellow co-editor…In any event, Roberto Perotti (the other macro co-editor) handled the paper very competently and ended up accepting it. But he definitely didn’t go easy on us!
The project got started during a period in which I was visiting regularly the Bank of Spain as an academic consultant. This gave me the chance to interact with David and Javier, two of its leading macroeconomists, who would become co-authors in several projects. The New Keynesian (NK) model was well on its way to becoming the reference model in macro. Most of the research within the NK program up to that point had focused on the effects of monetary policy shocks and the optimal design of monetary policy, so fiscal policy had been left out of the focus. Much work had been done in previous years on the effects of government spending in the context of Real Business Cycle (RBC) models, and there was also a growing body of empirical evidence on those e¤ects.1 At that time, we felt RBC models provided an unsatisfactory account of the effects of changes in government purchases. First, they relied on wealth effects on the labor supply as the key transmission mechanism to activity. Secondly, they implied (conditional) countercyclical real wages, a prediction that was hard to detect in the data. And thirdly, their implied multipliers on output were generally small (less than one, most often), a finding that was associated with a negative multiplier on consumption. The latter prediction was also at odds with some of the available evidence, including that in Blanchard and Perotti (2002) and our own preliminary evidence (eventually reported in our JEEA paper). Interestingly, and as we argued in our paper, the increasingly popular NK model was not able to get around the prediction of a negative consumption multiplier, at least under standard specifications of the monetary policy rule.
All this led us to consider a straightforward extension of the NK model, one that was inspired by the empirical specifications of tests of the permanent income hypothesis that Campbell and Mankiw (1989) had used some years earlier. Our modification of the NK model consisted in allowing for two types of consumers, which we referred to in the paper as “Ricardian” and “Rule of Thumb.” The former were assumed to have full access to financial markets, whereas the latter held no assets and just consumed their (after-tax) labor income on a period-by-period basis. Little did we suspect at that time that we had written the first example of what would eventually become known as a TANK model!2
With the benefit of hindsight, these are in my opinion the main insights/contributions of our paper:
The introduction of a Keynesian cross mechanism in the NK model, with the consequent amplification of the effects of shocks through the induced effect on consumption (and, hence, aggregate demand) of any increase in output.
The joint role of nominal rigidities and hand-to-mouth consumers in generating a positive consumption multiplier. Each assumption in isolation is not sufficient (at least under standard preferences), as shown through a back-of-the-envelope proof by contradiction in our introduction.
The implications of hand-to-mouth consumers on the conditions for equilibrium uniqueness, an issue which we analyzed extensively in a separate paper (Galí et al. (2004))
The dependence of the size of the multipliers on the endogenous component of monetary policy, as an illustration of the more general principle (now well understood) that with nominal rigidities no shock has effects that are invariant to the monetary policy rule in place.
The introduction of a non-competitive wage schedule, consistent with demand-determined employment and identical employment responses across types. In an appendix we provided some possible microfoundations to our assumed specifications, based on the solution to the problem of a union representing the two types of workers/consumers.
The analysis and empirical tests of the differential predictions of a TANK model relative to a representative agent model with utility nonseparable in consumption and leisure. This part of the paper is, I believe, not well known. But it was the focus of one of the referee reports and much of revision efforts.
The citations of our 2007 paper have clearly been boosted by the recent explosion of work on HANK models. Some recent work in that literature has examines the effects of government spending in an environment with a much richer heterogeneity. A look at those papers makes clear that research in macro has come a long way since our modest JEEA contribution, at least in its effort to capture more dimensions of the complexity of real-world economies, by including sectoral heterogeneity, network links, etc., in addition to the richer household heterogeneity that is the hallmark of HANK models.3
Notes:
1See, e.g. Christiano and Eichenbaum (1992) and Baxter and King (1993). See Ramey (2011) for an overview of the empirical evidence.
2TANK stands for “Two Agent New Keynesian Models”. TANK models are considered a tractable version of more complex HANK models, whose exploration has stimulated a large literature in recent years (HANK stands for "Heterogeneous Agents New Keynesian"). In the recent literature the “rule of thumb” label has been replaced by a more informative one: “hand to mouth”.
3See, e.g. Ghassibe and Zanetti (2023), Schaab and Tan (2023) and Cox et al. (2023) for recent examples of that work.
References
Baxter, Marianne and Robert King (1993). “Fiscal Policy in General Equilibrium,” American Economic Review 83, no. 3,315–334.
Blanchard, Olivier and Roberto Perotti (2002). “An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output,” Quarterly Journal of Economics, vol CXVII, issue 4,1329–1368.
Campbell, John Y. and N. Gregory Mankiw (1989). “Consumption, Income, and Interest Rates: Reinterpreting the Time Series Evidence,” in O.J. Blanchard and S. Fischer (eds.), NBER Macroeconomics Annual 1989,185–216, MIT Press.
Christiano, Lawrence J. and Martin Eichenbaum (1992). “Current Real Business Cycle Theories and Aggregate Labor Market Fluctuations,” American Economic Review 82,430–450.
Cox, Lydia, Jiacheng Feng, Gernot J. Mueller, Ernesto Pastén, Raphael Schoenle, and MichaelWeber (2023). “Optimal Fiscal Policy with Heterogeneous Sectors,” mimeo.
Galí, Jordi, J. David López-Salido and Javier Vallés (2007). “Understanding the Effects of Government Spending on Consumption,” Journal of the European Economics Association, vol. 5, issue 1,227–270.
Galí, Jordi, J. David López-Salido and Javier Vallés (2004). “Rule of Thumb Consumers and the Design of Interest Rate Rules,” Journal of Money, Credit, and Banking, 36(4), 739–764.
Ghassibe, Mishel and Francesco Zanetti (2023). “Keynesian Micromanagement,” mimeo.
Ramey, Valerie (2011). Can Government Purchases Stimulate the Economy?” Journal of Economic Literature 49(3): 673–85.
Schaab, Andreas and Stacy Yingqi Tan (2023). “Monetary and Fiscal Policy According to HANK-IO,” mimeo.
David Sraer and David Thesmar introduce their article, “Performance and Behavior of Family Firms: Evidence from the French Stock Market” (2007)
We had no idea that this paper would be so successful. It was the early 2000 s. Sraer was starting his PhD in Toulouse. He was interested in working on family firms, and it turned out Thesmar, at the French statistical office (INSEE), had put together a dataset of publicly listed firms. After a quick inspection of the data, it became clear there were a lot of family firms in there. What was striking to us at the time was that there were so many family firms in the world, yet so little empirical research on these animals. In the early 2000 s, most empirical corporate finance research was produced on U.S. publicly listed firms, and the paradigm was that of the widely held corporation à la Berle and Means. A small literature on family firms was emerging, mostly arguing that family firms were mismanaged, and we set out to check if that was the case in the French data.
The dataset had been constructed for another project on French capitalism—which led to papers with Bertrand, Kramarz, and Schoar (one of them also published in JEEA!). Data construction had been quite painful. The source data were text files on CD ROMs, and all the info had to be translated into firm-level data (including accounts, top executives, board members—some sort of French COMPUSTAT). There were no predocs, no RAs, and no NLP library on Python. Thesmar had written a quite ugly Perl script to parse the text files. Once this was done, Sraer went over every single firm in the data, to classify them as family-owned, family-managed, or founder-managed. He read hundreds of company websites and press clips. This is a time when both of us became experts in the individual histories of French midcaps. A very specific knowledge that we have mostly forgotten everything about.
We had a lot of fun working on this paper but did not fully appreciate that there was a demand for it. We barely sent it to conferences (Thesmar remembers a conference at the University of Bern; Sraer gave the paper in Toulouse and at a CEPR conference in Istanbul). We very quickly sent it for publication in a finance journal. We had no experience with the editorial process in the field and knew very few finance academics. So, we got politely dinged for not positioning the paper right and not citing the right people.
Jean Tirole—Sraer's PhD supervisor—had been instrumental in launching JEEA in the early 2000 s and encouraged us to resubmit there. We are glad we followed his advice: JEEA turned out to be a much better home for the paper and the editorial process boosted its impact—probably much more than a finance journal would have. Xavier Vives was the editor in charge and pushed us very hard. The paper we had sent to him was nice but on the shallow side: It was showing that family-managed firms performed better but did not provide much explanation for it. The revised version dug much harder into potential explanations, finally showing that family firms create value because they can commit to long-run insurance contracts with their workers, extracting wage concessions in exchange. In the end, it is this extra mile that gave the paper its spot in the literature. That family firms outperform widely held ones cannot be a generic result, but that family-run firms create value by having a longer horizon is probably something that applies everywhere (though it may not dominate the negative effects of family management). Hence, this is a case where finding an explanation for an empirical fact increases the external validity of empirical work and its impact. We are grateful to Xavier Vives for seeing a potential we had no idea of in this paper.
The paper started a whole research agenda for the two of us on empirical corporate finance. While we stopped working on family firms, we continued writing papers on the real effects of corporate finance and ownership. The JEEA paper led us to realize that there was interest in empirical corporate finance studies outside of the US (where the context differs but the data are more granular). In follow-up work, we analyzed the effect of LBOs on firm growth, the effect of credit constraints on investment, the role of bottom-up corporate governance, etc. We also studied the effect of various policies on the real economy, such as banking deregulations, loan guarantee programs, insurance for unemployed entrepreneurs, etc. This agenda is still alive today, though it has evolved from a reduced-form approach into structural work.
Paola Giuliano introduces her article, “Living Arrangements in Western Europe: Does Cultural Origin Matter? (2007)
Living Arrangements in Western Europe: Does Cultural Origin Matter?” was my job market paper as a graduate student and it started my interest in the economics of culture. If I have to summarize my research journey, I would probably describe it in the following way: tell me where you were born and in which year and I will tell you what your economic behavior is going to be!
I moved to the United States to do a PhD in Economics at the University of California at Berkeley. The first thing that was apparent to me when I moved to the United States was the diversity in social norms and cultural values of many of my classmates, all coming from a large range of countries. Whether they were Italians, Argentinians, Americans or Turks, their way of behaving reflected, by a large extent, what was the typical behavior of the place where they were born. We were belonging to the same generation, but the economic and political histories of our countries were also vastly different. And that was another striking feature, confirmed by the casual observation of Italian immigrants of different generations. We had a lot of similarities, but the time in which we were born made us also partially different.
Both observations have been at the core of my research journey. The main idea of “Living Arrangements in Western Europe: Does Cultural Origin Matter?” was that conventional economic analyses have not been successful in explaining differences in living arrangements and in particular the large fraction of young adults living with their parents in Mediterranean Europe. The initial intuition was that this peculiar pattern could have been caused by differences in cultural norms regarding the strength of family ties. In countries with strong family ties, individuals do not want to leave their parents’ place whereas the opposite is true in societies in which family links are weaker. The main challenge was the econometric identification. Causality could have run from economic variables to cultural traits or vice versa, or a third variable could have caused both economic outcomes and cultural norms. To help mitigate these concerns, I decided to look at the behavior of second-generation migrants in the United States and relate their behavior to the one from their country of origin. These migrants are subject to the same formal institutions as non-migrants but inherit a different set of cultural traits from their parents. Indeed the paper shows that the behavior of second-generation migrants in the US mimics that of the young in the country of origin: those with Southern European parents stay at home longer and the effect of length of stay at the parents’ home in the country of origin on length of stay in the US is large and significant, controlling for other individual-level correlates of living arrangements (income, education, etc.).
The JEEA paper was the first paper in which I used second-generation immigrants as a way of isolating the relevance of cultural norms. This identification strategy has since become widespread in economics. The paper won the Young Economic Award from the European Economic Association in 2004 and it was solicited for publication at the JEEA. Studying culture was not very common when I wrote my job market paper, especially in applied economics. On the theory side a great source of inspiration was the work of Bisin and Verdier (2001), which was and remains the seminal model to study cultural transmission. But there was very little empirical evidence on the importance and origin of cultural norms, with few exceptions, such as “Long Term Persistence,” by Guiso, Sapienza and Zingales (2016), also published in the JEEA.
An important theme present in my job market paper was that the variation in the organization of the family around the world had important consequences for many economic decisions and attitudes, from participation in the labor force, home production, saving and geographical mobility to risk- taking, trust and social capital. In subsequent work, I looked at the role of family ties on economic behavior, by creating a measure of family ties, capturing beliefs on the importance of the family in an individual's life, the duties and responsibilities of parents and children, and love and respect for one's own parents, and using responses from the World Value Survey. Two of my papers on the topic were subsequently published in the JEEA: “Family Times and Political Participation” (joint with Alberto Alesina, JEEA, 2011) and “Family Ties and the Regulation of Labor” (joint with Alberto Alesina, Yann Algan and Pierre Cahuc, JEEA, 2015). The first paper contributes to understand the origin and evolution of social capital, by generalizing an idea put forward by Banfield (1958) in his study of a southern Italian village. Banfield (1958) defines a specific societal structure, known as amoral familism, in which individuals exclusively trust their family members but do not trust outsiders. This societal structure leads to low civic engagement, low social capital and low trust in institutions. Our paper confirmed this idea by looking at within-country comparisons of individuals using data drawn from the World Value Survey, and also second-generation immigrants who moved to one of 32 different destination countries. In “Family Values and the Regulation of Labor” (2015) we instead looked at the interaction between cultural values and labor market institutions. In cultures with strong family ties, moving away from home is costly. To avoid moving and limiting the rents of firms, individuals with strong family ties rationally choose regulated labor markets, even though regulation is associated with lower income and higher unemployment. In the data, we first uncover a correlation between family structures in the Middle Ages and labor market regulations. Individuals with strong family ties are also less mobile, have lower wages and higher unemployment.
My research on culture has continued since then, looking at deep historical roots of cultural norms, their evolution over time and various implications for economic and political behavior. The JEEA was instrumental to the development of my research identity. Different editors in various parts of my academic career have been willing to bet on papers a bit ahead of time. My research journey would not have been possible without such an intellectual vision of the Editorial Team. I have been also very fortunate to have coauthors and colleagues who share the same vision: my advisor in graduate school, George Akerlof, my coauthor and friend, Alberto Alesina, whom I greatly miss, all my coauthors, and my colleagues and students in the Global Economics and Management unit at UCLA, my daily source of inspiration.
References
Alesina, Alberto, Yann Algan, Pierre Cahuc and Paola Giuliano (2015). “Family Ties and the Regulation of Labor.” Journal of the European Economic Association, 13 (4), 599–630.
Alesina, Alberto and Paola Giuliano (2011). “Family Ties and Political Participation.” Journal of the European Economic Association, 9 (5), 817–839.
Banfield, Edward C. (1958). The Moral Basis of a Backward Society, Free Press, New York.
Bisin, Alberto and Thierry Verdier (2001). “The Economics of Cultural Transmission and the Evolution of Preferences.” Journal of Economic Theory, 97, 298–319.
Giuliano, Paola (2007). “Living Arrangements in Western Europe: Does Cultural Origin Matter?,” Journal of the European Economic Association, 5(5): 927–952.
Guiso, Luigi, Paola Sapienza and Luigi Zingales (2016). “Long Term Persistence.” Journal of The European Economic Association, 14 (6), 1401–1436.
Guido Tabellini introduces his article, “Culture and Institutions: Economic Development in the Regions of Europe” (2010)
The first version of this paper was written in 2004. At the time, the effect of institutions on economic development was hotly debated. In their seminal paper, Acemoglu, Johnson and Robinson (2001) had shown that current economic development is largely explained by political institutions in the distant past. But the mechanisms behind these correlations were unclear.
Acemoglu, Johnson and Robinson emphasized institutional persistence: current institutions are shaped by past institutions, and they in turn influence economic development. Others pointed out that commonly used indicators of current institutions measure institutional outcomes, rather than formal institutions, and argued that the quality and functioning of current institutions are influenced by a variety of other factors besides past institutions.
I was exposed to that debate thanks to my participation in a research program at the Canadian Institute for Economic Research, chaired by Elhanan Helpman. Daron Acemoglu and Jim Robinson were also program members, together with other leading scholars in economic history, political economics and economic growth. Nobody disputed that distant political institutions leave huge legacies on economic development and on the functioning of current institutions. But what is the source of these persistent effects?
Having grown up in Italy, it seemed obvious that culture is also part of the historical transmission mechanism. As argued by Putnam, areas of Italy that had experienced self-government and representative political institutions in the distant past, today have a more civic culture and better functioning institutions. Culture is certainly not immutable. On the contrary, there are several a priori reasons for thinking that absolutist and authoritarian regimes destroy civic capital, spread clientelist practices and diffuse communitarian (as opposed to universalistic) values. If these cultural traits are slow-moving, they can provide a link between past political institutions, the functioning of current institutions and economic development.
A challenge in exploring the empirical validity of this idea is to control for the confounding effect of institutional persistence. This is why I focused on regional European data. Thanks to a rich political history, there is large variation in the institutions that ruled regions within European countries in the distant past. Estimating correlations from within country data removes the effect of persistence in national political institutions. Since these countries have been quite centralized and with stable borders for over a century, any observed correlation between past regional institutions and regional outcomes cannot be attributed to institutional persistence—unless “institutions” is such a broad category to be almost meaningless.1
With the research assistance of Massimiliano Onorato, who at the time was a PhD student at Bocconi University, we coded the political institutions that ruled different European regions centuries ago, extending backward in time the criteria used in the literature to measure constraints on the executive. I also reread Putnam and Banfield, to see which cultural traits (among those measurable from survey data) they deemed distinctive of the more backward Italian regions.
As expected, the reduced form analysis strongly supported the notion that past institutions leave profound legacies. On the one hand, European regions that in the past were ruled by more absolutist regimes currently display less civic and less universalistic cultural traits. On the other hand, they are also less developed and continue to grow more slowly. These results confirm the importance of past institutions for economic development, as established by Acemoglu, Johnson and Robinson in cross country data, but cannot easily be explained by institutional persistence per se.
To argue that culture is part of the transmission mechanism from past institutions to economic development, an additional step was needed. Following the literature that used past institutions as an instrument for current institutions, the paper uses past regional institutions as an instrument for current regional culture. The main finding is that the component of regional culture explained by past regional institutions is robustly correlated with the current level and the recent growth rate of regional GDP per capita. Identification hinges on the controversial restriction that, after controlling for indicators of economic development in the previous century, measures of education in the 1960 s and other historical variables, past political institutions in the region only influence current economic development through regional culture. The paper extensively discusses the validity of this assumption and attempts to relax it in various ways and acknowledges its potential problems. Nevertheless, this assumption proved too restrictive for some referees. This is why the paper was published only in 2010, six years after its first (and very similar) version.
Yet, the still unpublished paper circulated and continued to be cited. Subsequent research by several others (and by myself in the presidential lecture at the European Economic Association, Tabellini 2008a) confirmed the importance of culture in other related contexts and with different identification strategies. The empirical findings in this paper also led me to investigate the historical mechanisms behind the transmission of communitarian vs universalistic values, in a theoretical paper that was published much more quickly and easily (Tabellini 2008b). By then, the notion that culture is shaped by past social and political arrangements, and that it is a fundamental determinant of the functioning of institutions and of individual behavior, had become widely accepted.
Note:
1Switzerland, the most decentralized European country, is not in the sample that I studied.
References
Acemoglu, D., S. Johnson and J. A. Robinson (2001). “The Colonial Origins of Comparative Development: An Empirical Investigation,” American Economic Review, 91:1369–1401.
Tabellini, G. (2008a). “Institutions and Culture,” The Journal of the European Economic Association, Presidential Lecture to the European Economic Association, April-May.
Tabellini, G. (2008b). “The Scope of Cooperation: Values and Incentives,” The Quarterly Journal of Economics, August.
David Card, Christian Dustmann, and Ian Preston introduce their article, “Immigration, Wages, and Compositional Amenities” (2012)
This paper arose out of our longstanding interest in the economic effects of immigration, including the impacts on both labour market opportunities for natives and government costs and revenues. Understanding these impacts is evidently crucial for informed decision-making and the formulation of effective policies.
Despite our interest in these questions, and the tendency at the time to interpret views about immigration through the lens of economic costs and benefits, we were skeptical about the relevance of “purely economic” concerns as an explanation for the widespread public hostility to immigration. For one thing, hostile public opinion was at variance with the prevailing economic evidence, which suggested a relatively neutral or even somewhat positive impact of immigration. That could, of course, reflect a failure to communicate economic research findings. Still, we suspected something more profound: that the roots of public concern lay in the [perceived) social and cultural impacts of immigration, and that expressed concerns about economic impacts were often just a polite way of voicing antipathies arising from social and cultural concerns.
Two of us (Dustmann and Preston) had previously examined this hypothesis using British attitudinal data. In early 2000, the newly created European Social Survey opened a call for proposals for specialized modules for its inaugural 2002 survey. We decided to try and build on this earlier work with a more extensive series of questions on attitudes toward immigration. We put together a multidisciplinary team to try to distill the best existing work from Sociology, Political Science, and Economics, and ultimately created a successful proposal for a module consisting of around 60 questions.
The module provided an opportunity to delve deeper into views about more traditional economic concerns around immigration (including impacts on jobs, government costs, and crime), as well as respondents’ views about the importance of linguistic, racial, and religious homogeneity. Collaborating with the central questionnaire design team, we formulated carefully crafted questions to effectively separate and capture various dimensions of attitudes, encompassing economic and social factors.
The process of designing the questions raised major challenges. The 22 ESS countries had very different historical experiences with migration, very different immigrant populations, and different sensitivities in the associated public debate. Survey questions had to be framed in a way that could be interpreted similarly despite these differences, while avoiding biases or assumptions that could potentially prejudice the respondents or the research outcomes.
Our original intention was to write a book on the formation of attitudes on immigration, and to supplement the ESS data with survey data for the US. Ultimately, we gave up on this goal, and focused instead on the narrower goal of separately identifying the roles of economic and social/cultural concerns in mediating views about immigration policy. (The paper also adds a third dimension, reflecting international altruism.)
An advantage of the ESS module for this purpose is the relatively large number of questions on both sets of issues. We believed (and still believe) that by combining the questions we were able to extract more reliable and interpretable signals of respondents’ views about the economic and sociocultural effects of immigration. Following this approach, we concluded that the evidence pointed strongly to the dominance of the social and cultural dimensions.
At the time, publishing this type of research in economic journals presented difficulties. Many economists started from the position that we could learn nothing (or very little) from attitudinal data. Fortunately, this view has gradually eased in our field, and today research based on such data is held in much higher regard. A second problem we faced was that the factor-analytic approach we used to combine information from multiple questions was unfamiliar to economists (though more widely used in Sociology). Fortunately, the reviewers at JEEA were more open-minded.
Perhaps worthwhile mentioning is the reason for the title of the paper, in particular, the novel term “compositional amenities.” What we had in mind when we first formulated the project was xenophobic or racist sentiments. As we read more of the work in other fields, however, we recognized that we were dealing with a broader class of concerns. In response, we invented the phrase “compositional amenities” as a tonally neutral description of concerns regarding the impact of immigration on the diversity of receiving societies. At the time, we worried that the term might feel, to some readers at least, like sanitization of the toxicity of the attitudes involved. In retrospect, we believe that it usefully captures something important. The term has spread, occurring in other articles and even in national newspapers.
The conclusions of the paper seem to have stood up fairly well. The idea that non-economic concerns are more important in understanding attitudes to immigration than economic ones was perhaps always more controversial in front of an audience of economists than those from other disciplines, but now seems to be part of general conventional wisdom. Moreover, our attribution of the stronger anti-immigrant attitudes among less educated people to social and cultural concerns—rather than to concerns over labor market competition—seems to have gained traction.
In the decade since the paper was published, the prominence of cultural and social considerations—the “compositional amenities” of the paper—in political discourse, particularly on the populist right, has appeared undiminished. Meanwhile, the European Social Survey has continued to put some of our main immigrant questions into the field every two years. Surprisingly, the evidence points to a gradual positive evolution in attitudes toward immigration in the population as a whole as well as within generational cohorts. Figure 1 shows, for instance, how the mean positivity towards immigration, measured by an index similar to that used in the paper, has varied within cohorts (defined by decade of birth) over the successive waves of the survey for the fifteen countries present in every year of the ESS. It would be interesting to explore the extent to which this shift in views has been driven by changes in economic concerns versus the compositional concerns we identified in our paper over a decade ago.
Attitudes to immigration by cohort, ESS 2002–2020. Data is from the ten waves of the European Social Survey between 2002 and 2020. The sample consists of respondents from the fifteen countries present in all ten waves (Belgium, Finland, France, Hungary, Germany, Ireland, Netherlands, Norway, Poland, Portugal, Slovenia, Spain, Sweden, Switzerland, and United Kingdom). The lines are cohort mean values of the average of the variables imsmetn (“Allow many/few immigrants of same race/ethnic group as majority”) and imdfetn (“Allow many/few immigrants of different race/ethnic group from majority”), recoded to lie between 0 and 1 with higher values reflecting greater openness to immigration (“0: None; 0.33: Few; 0.67: Some; 1.00: Many”). Cohorts are defined by decade of birth and are included only if the cohort sample is at least 500 respondents (which restricts to those born in the 1930 s to 1990 s). Sample means are weighted.
Gianmarco I. P. Ottaviano and Giovanni Peri introduce their article, “Rethinking the Effect of Immigration on Wages” (2012)
What are the effects of immigration on natives’ wages? This is the question we started to discuss over a coffee when we met and caught up several years after getting to know each other as undergraduate students at Bocconi University. It was a period in which rising immigration had substantially increased the stocks of immigrants both in Europe and the US, and the public debate was raging about the possible negative consequences of immigrant competition for the wages of native workers. Yet, there was no consensus among economists about how to identify and measure those consequences.
A first issue concerned the actual substitutability of immigrants and natives in the labor market. On the one hand, labor demand being downward sloping, it was clear that the increase in labor supply due to an inflow of new immigrant workers could depress the wages of all other workers, no matter whether natives or old immigrants. On the other hand, it was also clear that new immigrants could have a strong negative impact on the wages of natives only if perfectly substitutable with them. Imperfect substitutability could make native labor productivity increase with the stock of immigrants pretty much like overall labor productivity increases with the capital stock. It was, therefore, of paramount importance to have accurate estimates of the elasticity of substitution between immigrant and native workers. The state of the art, however, simply assumed that immigrants and natives had to be perfect substitutes after controlling for education and experience, possibly discounting foreign education and experience as less valuable than domestic ones in the destination country's labor market.
In our discussion over coffee, we found ourselves debating possible reasons why immigrant and native workers might still be imperfect substitute despite sharing equivalent experience and educational attainments. Something that came immediately to mind was that some jobs are language intensive, which would create imperfect substitutability if immigrants did not speak fluently the native language. More generally, due to our common background in international economics, we had in mind that some sort of culture-driven comparative advantage might allow immigrants and natives to specialize in differentiated and complementary tasks to the benefit of overall production efficiency. This idea had already gained traction in management studies on diversity in multicultural teams, and thinking of different jobs as tasks was becoming very important in both labor and international economics. We often discussed the virtuous combination of complementarity of skills and ideas, for instance with reference to American and immigrant European physicists of Jewish origin that led to game changing breakthroughs in the US research on nuclear weapons during WWII, the story being that Americans and Europeans had comparative advantages in applied and theoretical physics respectively. When we freed the econometric analysis from the standard, yet ungrounded assumption of perfect substitutability between native and immigrants, the data turned out to support the existence of such complementarities. Within equivalent education-experience cells, the elasticity of substitution between immigrants and natives was indeed estimated to be finite rather than infinite as would be the case with perfect substitutability.
A second issue concerned aggregation: how to use the estimated elasticities to compute the aggregate effects of immigration? The challenge was to find a tractable way to account for the rich patterns of substitutability and complementarity between heterogeneous immigrants and natives within and between equivalent education-experience cells (and how to best identify those cells in the first place) in order to deliver an accurate calculation of the aggregate gains or losses from migrant inflows for the whole economy. Here we proposed a semi-structural approach based on a nested-CES production function. Exploring alternative nesting structures to find the best empirically relevant partition of workers into education and experience cells, we converged on a four-layered structure. Workers were first partitioned into those with low or high education. Then, the low (high) educated were split between those with or without a high school (college) degree. In each of the resulting four educational nests, workers were further divided into eight experience categories, within which the distinction between immigrants and native was finally made. The alternative nesting structures were grounded in the labor economics literature analyzing education and experience premia, and the selection among them was driven by the data.
When applied to US data in the period 1990–2006, aggregation based on our estimated elasticities of substitution between different types of immigrants and natives did not reveal negative impacts of the former on any group of natives. In contrast, immigration had a small positive effect on the wages of native workers with no high school degree (between +0.6% and +1.7%) and on average native wages (+0.6%). Workers who saw their wages cut were old immigrants, in particular those in the low education cells due to substitutability with the large inflows of new immigrants in such cells. Our calculations also accounted for the endogenous response of capital as a rising workforce increases the return to capital, with ensuing accumulation of capital helping labor productivity and wages.
Our findings were thoroughly questioned at the beginning, but then generally well received by colleagues, with some exceptions. George Borjas, whose previous work mostly highlighted the negative impact of immigrants on the wages of US natives, was not very keen to embrace our emphasis on the complementarity effects of immigrants. Because of this skepticism and opposition our paper found it hard to break through and circulated many years as a working paper. This is where the Journal of the European Economic Association made a difference. Intercepting the general mood of scholars in the field, its editors decided the Journal would host a Symposium on The Impact of Immigration on Wages, giving various experts the opportunity to express their own views and concerns. The editor is charge was Orazio Attanasio, and contributors included David Card, Christian Dustmann and Ian Preston, Marco Manacorda, Alan Manning and Jonathan Wadsworth, George Borjas, Jeffrey Grogger and Gordon H. Hanson, and us.
The Symposium was a great example of how scientific discourse should proceed, taking disagreements out of the closet into the daylight for the profession as a whole to make a call. About a decade since then, the profession seems of have made a clear call. According to Google Scholar (11/06/2023) our paper has been cited 2246 times, it has been replicated and extended to other countries, and it has become a standard reference in many policy documents focusing on the impact of immigration on wages.
Luigi Guiso, Paola Sapienza, and Luigi Zingales introduce their article, “Long-Term Persistence” (2016)
Innovation in research is challenging: it is difficult to come up with novel ideas and even more challenging to get them published. By definition, innovative research upsets existing priors. Starting from a negative prior, referees tend to reject new paradigms. As a consequence, the threshold for acceptance in academic journals is very high. It takes an open-minded editor to overcome this gap. For us, this problem was aggravated by another problem: the skepticism (not to call it disdain) economists used to have for any cultural explanation. When we began to write on culture and economics, most economists believed, to put it in the words of Robert Solow (1970), that any attempt to explain differences in economic performance using noneconomic factors was “amateur sociology.” We owe it to a few enlightened editors who were willing to bet on our ideas ahead of time: Tim Besley at AER who published our first paper on Social Capital and Financial Development (Guiso et al, 2004), and Andrei Shleifer who encouraged us to write our views on the Economics of Culture for the Journal of Economic Perspectives (Guiso et al., 2006). But “Long Term Persistence” faced much more resistance, and it took us a very long time, about 8 years, to find a place in a journal. Indeed, we are very thankful to the JEEA and the editor (Nicola Gennaioli) for taking a risk with our paper.
When it first came out as an NBER working paper in 2008 (earlier drafts had already been circulating two years before), it was the first paper to document the long-term persistence of culture. The notion that the establishment of free-city states in the 12th century could possibly impact social capital today seemed preposterous, especially to American referees, who in their cities could hardly see any trace of the culture of a few decades ago, let alone of 750 years ago. No matter how carefully the econometric was done, the results seemed unbelievable, and—as a result—the paper was rejected by several top economic journals.
Nonetheless, the paper received a lot of attention. Before its publication, it had more than 400 citations, and shortly after our first draft, several other papers began to explore the same concept in very different contexts. First, Nunn and Wantchekon (NBER 2009) traced back today's mist-trust among the black population to exposure to the slave trade “shock”; second, Voigtlaender and Voth (NBER 2011) documented the long-term persistence of cultural traits by showing that German antisemitism across German cities at the time of the Black Death predicts violence against Jews during Nazi Germany; third, Grosjean (WP 2011), also later published in the JEEA, shows evidence that today's culture of violence and homicides rates in the American South can be explained by the persistence of a culture of honor brought by Scot and Scot-Irish settlers centuries ago; fourth, Alesina, Nunn and Giuliano (NBER 2011) provide evidence that today's populations descending from ancestral societies using the plow to prepare the soil have inherited less gender equal attitudes and display lower female labor participation.
The good news is that all these papers helped shift the editors’ priors. If cultural norms persisted across centuries in many instances, our evidence was no longer an unusual outlier, but rather an illustration of a widely recognized pattern. The bad news is that all these authors were much more persistent (pun intended) in submitting to journals and thus they got their paper published before ours. What was innovative in 2008, by January 2015, when we submitted to JEEA, started to be old news. Once again, we are indebted to JEEA and the editor for pushing us to innovate in another dimension: the mechanism. What made the paper (in fact all the literature on this topic) less credible was the lack of evidence on the transmission mechanism. The big difference between the 2008 NBER version and the published version in 2016 is precisely the evidence on the mechanism of cultural transmission.
In psychology it is well-known (e.g. Maddux 2009) that individual experiences can affect personal beliefs. This idea has also been used in economics by Malmendier and Nagel (2011). Our idea is that an historical event which affects an entire community is likely to affect the beliefs of the population living in that area for a long time, because of a combination of intergenerational transmission of beliefs (Bisin and Verdier 2000) and socialization. But what was the belief triggered by the formation of free-city states in the 12th century that increases social capital today? And what is the evidence?
In describing the attitudes prevailing in the Italian South (la miseria), Banfield (1958) talks about the helpless feeling of the typical peasant, what modern psychologists label self-efficacy. Thus, it was only natural for us to focus on self-efficacy. To show the existence and persistence of this belief we used two different methods. First, we looked at the attitudes of eighth-grade pupils, as captured by a national survey. Because the beliefs of young kids are predominantly shaped by their parents, measuring their attitudes is indirect evidence of intergenerational transmission. The second method relies on an analysis of the fiction books and popular literature prevailing in different communities, a strategy perfected several years later by Michalopoulos and Xue (2021). The first strategy confirmed not only the existence of different beliefs between free city states and non-free city states, but also a big difference between the North and the South of Italy. The second strategy showed that the difference between the North and the South was reflected in the fiction literature of the 19th century, before migration and television homogenized the country. In so doing, we were able to suggest a mechanism for Putnam (1993)’s famous intuition that the experience of free city states in Center-North Italy made democracy work better. This idea has not received yet a lot of attention in economics. But the same methodology started to be used in history (Diamond, 2019). We remain hopeful for the long-term persistence of good ideas.
References
Alesina, Alberto, Nathan Nunn, and Paola Giuliano (2011). “On the Origins of Gender Roles: Women and the Plough,” NBER 17098, https://doi.org/10.3386/w17098.
Banfield, Edward C. (1958). The Moral Basis of a Backward Society, Free Press, New York.
Bisin, A. and Verdier, T. (2000). “Beyond the melting pot”: cultural transmission, marriage, and the evolution of ethnic and religious traits. The Quarterly Journal of Economics, 115(3), pp. 955–988.
Diamond, Jared (2019). Upheaval: How Nations Cope with Crisis and Change, Allen Lane.
Grosjean, Pauline A. (2011). A History of Violence: The Culture of Honor as a Determinant of Homicide in the US South. Available at SSRN: https://ssrn.com/abstract=1917113 or http://dx.doi.org/10.2139/ssrn.1917113
Guiso, Luigi, Paola Sapienza and Luigi Zingales (2008). “Long Term Persistence.” NBER 14,278, https://doi.org/10.3386/w14278.
Guiso, Luigi, Paola Sapienza and Luigi Zingales (2016). “Long Term Persistence.” Journal of The European Economic Association, 14 (6), 1401–1436.
Maddux, James E. (2009). “Self-Efficacy: The Power of Believing You Can.” In Oxford Handbook of Positive Psychology, edited by Shane J. Lopez and C. R. Snyder. Oxford University Press
Malmendier, U. and S. Nagel (2011). Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking? Quarterly Journal of Economics 126 (1), 373–416
Michalopoulos Stelios and Melanie Meng Xue (2021). “Folklore,” The Quarterly Journal of Economics 136 (4), 1993–2045, https://doi.org/10.1093/qje/qjab003.
Nathan Nunn & Leonard Wantchekon (2009). “The Slave Trade and the Origins of Mistrust in Africa,” NBER 14783, https://doi.org/10.3386/w14783.
Putnam, Robert, Robert Leonardi, and Raffaella Nanetti (1993). Making Democracy Work: Civic Traditions in Modern Italy. Simon and Schuster.
Solow, Robert M. (1970). “Science and Ideology in Economics.” Public Interest 21: 94–107. Accessed on July 12, 2023. https://www.nationalaffairs.com/public_interest/detail/science-and- ideology-in-economics.
Voigtlaender Nico and Hans-Joachim Voth (2011). Persecution Perpetuated: The Medieval Origins of Anti-Semitic Violence in Nazi Germany, NBER 17113, https://doi.org/10.3386/w17113.
