Z **Archived from Fall 2008** American Economic History

20081124: Looking South and Looking East

Looking South: Engerman and Sokoloff:

What Has Happened in the New World?

• Four areas:
  • U.S.-Canada
  • Mexico-Brazil
  • Caribbean + slave Brazil
  • Southern cone
• U.S.-Canada very rich: rest not so. Why?
  • $80K per worker per year in the U.S. $10K-$20K more common in Latin America..
  • All have (or had) favorable land-labor ratios after conquest and plagues...
  • All had abundant natural resources...
  • All "began" with an abundance of land relative to labor...
  • Southern cone keeping up with North America until the 1930s--I will not deal with that today...
• Two lines of explanation: problems of slavery and ex-slavery; problems of mainland Latin America
  • The Puzzle: We Explain United States Growth as Markets + Resources = Accumulation + Technology
  • But what happens when we go to Latin America?
    • From the perspective of 1700, the United States is a marginal new-world economic area
    • Yet Latin America today lags far behind the United States and Canada
  • To explain U.S. vs. Latin America, you need "institutions"
    • What are institutions?
    • Where do institutions come from?
• Three Theories of Institutions:
  • "Legal origins" (Shleifer et al.)
  • "Tropical diseases and grab and run" (Acemoglu et al.)
  • Engerman and Sokoloff
    • A historians' story--which means, "it's complicated"
    • Legal origins is broadly wrong--or at least overemphasized
    • Grab-and-run due to tropical diseases also greatly overemphasized
• Factor endowments
  • Indigenous population oppression
  • Resource curse--slavery
    • Slavery in the Connecticut River valley
    • Slavery in New York City
  • Key paragraph: "The British colonies in the New World evolve quite distinct societies and sets of institutions.... The majority that failed shared certain salient features with Latin America.... [These features] allowed for average standards of living that were high at that time... [but] less well suited for the realization of sustained economic growth..."
  • "Non-white" a proxy for savage economic (and political!) inequality
  • European migrant standards of living 2x or more those in Europe throughout the colonial period--$1000 of today's dollars per capita per year
  • European standards of living 4x those in Europe in slave-staple-hacienda colonies--$2000 of today's dollars per capita per year
  • Staple crops: sugar, coffee, rice, tobacco, cotton easily produced by slave labor in the Caribbean and Brazil. Haiti 3x as rich as United States in 1790?
  • Extensive indigenous populations in Mexico and Peru
    • Less than 20% of Mexican, Peruvian population "white" as of 1800
• Economic and political equality a very good thing
  • Land policy
  • Immigration policy
  • (Mercantilist) trade policy
  • Middle-class demand for manufactures: "American system"
    • Timing of industrialization
  • Education
    • Other human capital: familiarity with technology or markets

---

Looking East: Alesina et al.:

20081119: Post-WWII Stabilization Policy

Economics 113 Syllabus: Fall 2008

Economics 113: American Economic History

This File: http://tinyurl.com/43sufu; http://delong.typepad.com/american_economic_history/2008/08/economics-113-s.html

J. Bradford DeLong delong@econ.berkeley.edu Evans 601: Lecture: 4 LeConte; MW 4-5:30

Andrej Milivojevic andrej@berkeley.edu: Sections: T4-5 87 Dwinelle, W8-9 61 Evans
Marc Gersen mgersen@econ.berkeley.edu: Sections: F2-3 55 Evans, F3-4 55 Evans
Matthew Sargent sargent@berkeley.edu: Sections: M9-10 85 Evans, Th1-2 45 Evans

---

For those unfamiliar with U.S. history, Marty Olney recommends John Faragher et al (2005), Out of Many (New York: Prentice-Hall)

---

W Aug 27: OVERVIEW

• Lecture Notes: Administration and Overview; Why Are We Here? On the Lecture and the University;
• Lecture Audio: http://www.j-bradford-delong.net/2008_mov/20080827.mp3
• Required Readings: Walton and Rockoff, "The American Economy in Historical Perspective"; Six Families Budget Their Money, 1884

Sections Aug 28-Sep 3: Welcome, supply and demand (one page introduction due)

---

W Sep 3: Amerindians, Conquistadores, Explorers, Settlers, and Empires

• Lecture Notes: 10000 BC to 1800; Pre-Industrial Growth Accounting
• Lecture Audio: http://www.j-bradford-delong.net/2008_mov/20080903.mp3
• Required Readings: Walton and Rockoff, "Founding the Colonies; Bartholomew Gosnold Sails Along Northeastern North America, 1602:; Jared Diamond (1987), "The Worst Mistake in the History of the Human Race," Discover; Jared Diamond (2008), "Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?"
• Malthusian Economy Problem Set (due September 10): http://delong.typepad.com/american_economic_history/2008/09/20080903-malthu.html

Sections Sep 4-10: Basic geography

---

M Sep 8: Colonists, 1600-1776

• Lecture Notes: "Growth Accounting, Natural Resources, and Pre-Civil War America"; Notes for September 8
• Lecture Audio: http://www.j-bradford-delong.net/2008_mov/20080908.m4a
• Required Readings: Walton and Rockoff, "Colonial Economic Activities," "Economic Progress and Wealth"; Inventory of the Possessions of Thomas Springer, 1804; Peter Temin (1966), “Labor Scarcity and the Problem of American Industrial Efficiency in the 1850's”; "I Wove To-day": Elizabeth Fuller Grows Up in Rural Massachusetts

W Sep 10: Westward, Ho!

• Lecture Notes: Notes for September 10;
• Required Readings: Walton and Rockoff, "Land and the Early Western Movements," "Agriculture's Western Advance"; "We Are Not Entirely Out of Civilization"

W Sep 10: Malthusian economy problem set due

Sections Sep 11-17: Who benefited from slavery? Reading: Who Benefited Most from North American Slavery?

---

M Sep 15: Slavery and Its Legacy, 1600-1929

• Lecture Notes: http://delong.typepad.com/american_economic_history/2008/09/20080915-econ-1.html
• Required Readings: Walton and Rockoff, "The Entrenchment of Slavery and Regional Conflict," "War, Recovery, and Regional Divergence"; Claudia D. Goldin and Frank D. Lewis (1975), "The Economic Cost of the American Civil War: Estimates and Implications," Journal of Economic History, Vol. 35, No. 2. (Jun., 1975), pp. 299-326; "Is It Not Enough that We Are Torn From Our Country and Friends?": Olaudah Equiano Describes the Horrors of the Middle Passage, 1780s; Additional Reading (necessary background for problem set 2)

W Sep 17: Government, 1600-1870

• Lecture Notes:
• Required Readings: Walton and Rockoff, "English Mercantilism and the Colonies," The Constitution," "Public vs. Private Initiative on the Natural Waterways," "The Canal Era," "The Iron Horse, "The First Bank of the United States," "The Second Bank of the United States," "Experiments in State Banking Controls, "Protection from Foreign Competition"; John R. Nelson, Jr. (1979), "Alexander Hamilton and American Manufacturing: A Reexamination"; Nathaniel Hawthorne Travels the Erie Canal

Sections Sep 18-24: Review

---

M Sep 22: Review Mock Midterm

M Sep 22: Slavery benefit problem set due at lecture

W Sep 24: MIDTERM 1

---

M Sep 29: Financial Crisis Teach in

W Oct 1: Technologies, Factories, and Trade, 1870-1929

• Lecture Notes: Growth Accounting, 1865-1929: The Great Traverse
• Required Readings: Walton and Rockoff, "Industrial Expansion and Concentration"; Claudia Goldin and Lawrence Katz (1999) “Human Capital and Social Capital: The Rise of Secondary Schooling in America, 1910-1940,” Journal of Interdisciplinary History](http://www.nber.org/papers/W6439); J. Bradford DeLong, “Did J.P. Morgan’s Men Add Value?”; Andrew Carnegie's Ode to Steelmaking; A Mule Spinner Talks About Unemployment

M Oct 6: Workers, Unions, and Government, 1870-1929

• Lecture Notes:
• Required Readings: Walton and Rockoff, "The Emergence of America's Labor Consciousness," "Railroads and Economic Change"; Mark Twain Lampoons the Horatio Alger Myth; The AFL Protests Unemployment; Lincoln Steffens: The Shame of the Cities

M Oct 6: 1865-1929 Growth Accounting Problem Set due

---

W Oct 8: Depressions and Panics, 1840-1933

• Lecture Notes: The Coming of the Great Depression Audio: The Coming of the Great Depression
• Required Readings: Walton and Rockoff, "Industrial Expansion and Concentration," Money, Prices, and Finance in the Post-Bellum Era," "The Great Depression"; Eugene White (1990), “The Stock Market Boom and the Crash of 1929,” Journal of Economic Perspectives 4:2 (Spring), pp. 67-83; Martha L. Olney (1999), “Avoiding Default: The Role of Credit in the Consumption Collapse of 1930.” Quarterly Journal of Economics CXIV (February 1999): 319-335. Christina Romer (1993) “The Nation in Depression.” Journal of Economic Perspectives 7 (Spring 1993): 19-39

M Oct 13: Great Depression, continued

• Lecture Notes: The Great Depression Audio

W Oct 15: The New Deal, 1933-1941

• Lecture Notes: 20081013 Great Depression; Audio
• Required Readings: Walton and Rockoff, "The New Deal"; Margaret Weir and Theda Skocpol, "State Structures and Social Keynesianism"

W Oct 15: Simple Macroeconomics problem set due

Sections Oct 9-15: Keynes and Bernanke

M Oct 20: The New Deal, Continued

• Lecture Notes: The Gold Standard in the Twentieth Century Audio Missing

---

W Oct 22: World War II and Cold War, 1941-1956

• Lecture Notes: The Global Economy; Audio
• Required Readings: Walton and Rockoff, "World War II";

M Oct 27: Mass Production, 1910-1980

• Lecture Notes: ; Audio
• Required Readings: Walton and Rockoff, "Commerce at Home and Abroad," Manufacturing, Marketing, and Industrial Productivity"; W. Devine (1983), “From Shafts to Wires: Historical Perspective on Electrification,” Journal of Economic History pp. 347-72; J. Bradford DeLong and Barry Eichengreen (1993), “The Marshall Plan: History’s Most Successful Structural Adjustment Program”; Kissing Rudy Valentino

Sections Oct 16-22: Marshall Plan and European reconstruction

---

W Oct 29: Workers, Unions, and Wage Compression, 1929-1975

• Lecture Notes: American Income Inequality; Audio
• Required Readings: Walton and Rockoff, "The Rise of the Service Sector," "Unions"; Claudia Goldin and Robert A. Margo (1992), “The Great Compression”

Sections Oct 23-29: Feminism

M Nov 3: Focus on Women, 1870-present

• Lecture Notes:
• Required Readings: Walton and Rockoff, "The Changing Role of Women in the Labor Force"; Gavin Wright (1991), “Understanding the Gender Gap: A Review Article,” Journal of Economic Literature: 1153-63; Sue Bowden and Avner Offer (1994), “Household Appliances and the Use of Time” Economic History Review 47: 725-748; Claudia Goldin (2004) "The Long Road to the Fast Track" NBER WP 10331; Frances Willard Discovers the Bicycle

M Nov 3: Practice Second Midterm Out: http://tinyurl.com/dl20081103

Sections Oct 30-Nov 5: Intergenerational inequality

---

W Nov 5: Focus on African-Americans, 1900-present

• Lecture Notes: Audio
• Required Readings: Walton and Rockoff, "Minorities"; J. Smith and Finis Welch (1989), "Black Economic Progress after Myrdal," JEL (June), pp. 519-40, 557-61; Werner Troesken, “Race, Disease, and the Provision of Water in American Cities, 1889-1921,” Journal of Economic History 61 (September 2001): 750-776

Sections Nov 6-12: Review

---

M Nov 10: Review

W Nov 12: MIDTERM 2

---

M Nov 17: Focus on Immigrants, 1870-present

• Lecture Notes: Immigration Audio
• Required Readings: Walton and Rockoff, "Immigration, Politics, and Economic Effects," "The New Immigration"; Norman Asing: We Are Not the Degraded Race You Would Make Us

W Nov 19: Stabilization, Full Employment, and Inflation, 1950-present

• Lecture Notes: Stabilization Policy: http://tinyurl.com/dl20081119 Audio
• Required Readings: Walton and Rockoff, "Money, Banking, and the Business Cycle After World War II"; J. Bradford DeLong (1996), “Keynesianism, Pennsylvania Avenue Style: Some Economic Consequences of the Employment Act of 1946,” Journal of Economic Perspectives, 1996, vol. 10, issue 3, pages 41-53

Sections Nov 13-19: Alesina and the U.S.-Western Europe comparison

• Required Readings: Alberto Alesina, Edward Glaeser, and Bruce Sacerdote (2001), “Why Doesn’t the U.S. Have a European-Style Welfare System?”

W Nov 19: Family immigration story 500 word paper due

---

M Nov 24: Comparisons: Looking East and Looking South: Why Has There Been so Little Social Democracy in the United States? Why Has America Been so Successful?

• Lecture Notes: Audio
• Required Readings: Emma Goldman: "I Will Kill Frick"; Stanley Engerman and Kenneth Sokoloff (1994), "Factor Endowments: Institutions, and Differential Paths of Growth Among New World Economies"

---

M Dec 1: The End of the American Dream? The Productivity Slowdown, the Inflation of the 1970s, and the Great Widening

• Lecture Notes: The Inflation of the 1970s
• Required Readings: Walton and Rockoff, "Real Wages"; J. Bradford DeLong, "America's Only Peacetime Inflation: The 1970s"; Thomas Piketty and Emmanuel Saez (2003), "Income Inequality in the United States"

W Dec 3: The Productivity Speedup of the 1990s

• Lecture Notes: Audio

• Required Readings: Walton and Rockoff, "Achivements of the Past, Challenges for the Future"; Paul David (1990), “The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox,” American Economic Review, pp. 355-60; Blinder and Yellen, The Fabulous Decade

---

M Dec 8: The Crisis of Social Insurance: Pensions and Doctors

• Lecture Notes:
• Required Readings: Ronald Lee and Jonathan Skinner (1999), “Will Aging Baby Boomers Bust the Federal Budget?” Journal of Economic Perspectives 13 (Winter 1999): 117-140; David Cutler (2002), “Health Care and the Public Sector”

Sections Dec 4-10: New economy models

---

M Dec 15: Resources, Suburbs, Global Warming: Limits? Final Review: Review Lecture: Evans 10 Monday December 15 4-6 PM

• Required Readings: Nicholas Stern et al., "The Stern Review on Global Climate Change" http://www.hm-treasury.gov.uk/media/4/3/Executive_Summary.pdf; http://www.hm-treasury.gov.uk/media/A/6/Postscript.pdf; http://www.hm-treasury.gov.uk/media/1/8/Technical_annex_to_the_postscript_P1-6.pdf

M Dec 15: 1500 word final paper due

---

Th Dec 18: FINAL EXAM 8-11AM

20081017 Immigration

The Old Immigration and the New Immigration:

• An immigrating nation?
• Not so much since 1930--at least not on the national level...
• Immigrating regions--and non-immigrating regions...
• Did immigrants ever look like "old" America?
  • Paddy-wagon, welsh, Dutch treat, Dutch courage, Dutch uncle, liberty cabbage...

---

• An immigrating nation?
• About as much as Australia...
• Less so than Canada...

---

• Two immigrations...
• An immigration of the skilled and relatively well-off from Eurasia...
• An immigration of the unskilled and relatively poor from Latin America...
  • Disquisition on the meaning of "skill"...

---

• The political reaction...
• Economic impacts...
• Sociocultural impacts...
• Political impacts...

---

• How would you redraw this graph?

---

---

"Immigration and National Wages: Clarifying the Theory and the Empirics"

Gianmarco I.P. Ottaviano, (Universita’ di Bologna and CEPR)
Giovanni Peri, (University of California, Davis and NBER)

July 2008

http://www.econ.ucdavis.edu/faculty/gperi/Papers/OP_redux_july_2008.pdf

This paper estimates the effects of immigration on wages of native workers at the national U.S. level. Following Borjas (2003) we focus on national labor markets for workers of different skills and we enrich his methodology and refine previous estimates. We emphasize that a production function framework is needed to combine workers of different skills in order to evaluate the competition as well as cross-skill complementary effects of immigrants on wages. We also emphasize the importance (and estimate the value) of the elasticity of substitution between workers with at most a high school degree and those without one. Since the two groups turn out to be close substitutes, this strongly dilutes the effects of competition between immigrants and workers with no degree. We then estimate the substitutability between natives and immigrants and we find a small but significant degree of imperfect substitution which further decreases the competitive effect of immigrants. Finally, we account for the short run and long run adjustment of capital in response to immigration.

Using our estimates and Census data we find that immigration (1990-2006) had small negative effects in the short run on native workers with no high school degree (-0.7%) and on average wages (-0.4%) while it had small positive effects on native workers with no high school degree (+0.3%) and on average native wages (+0.6%) in the long run. These results are perfectly in line with the estimated aggregate elasticities in the labor literature since Katz and Murphy (1992). We also find a wage effect of new immigrants on previous immigrants in the order of negative 6%.

Focus on African Americans...

Focus on African Americans:

---

Focus on African-Americans

• Jim Crow and the post-Civil War South
  • Breaking southern biracial populism
  • Underinvestment in education
• The Great Migration to the North
  • Vicious discrimination in the north
  • But much higher wages than found in the south
  • Large scale residential segregation creates:
    • Northern ghettoes--places where land values were dropping because of the attractiveness of suburbs
    • Social pathologies...
• The Civil Rights Movement
  • The end of legal discrimination
  • How much difference does it make? Less than you would hope. Ferocious educational disparities persist--and in some cases are amplified as ghetto school quality falls. And in addition there is...
  • Illegal discrimination
    • How much illegal discrimination? Hard to tell...
    • Testers say "a lot". But the market can route itself around some discrimination...
    • Regression studies say "a lot": but employers know things that statisticians do not...
    • Amount surely falling over time...
  • Affirmative action and its dilemmas...

---

Focus on Women:

Claudia Goldin:

The first cohort, graduating college from the beginning of the twentieth century to the close of World War I, had either "family or career." The second, graduating college from around 1920 to the end of World War II, had "job then family." The third cohort – the college graduate mothers of the "baby boom" – graduated college from around 1946 to the mid-1960s and had "family then job." The fourth cohort graduated college from the late 1960s to the late 1970s. Using the NLS Young Women I demonstrate that 13 to 18 percent achieved "career then family" by age 40. The objective of the fifth cohort, graduating from around 1980 to 1990, has been "career and family," and 21 to 28 percent (using the NLS Youth) have realized that goal by age 40. I trace the demographic and labor force experiences of these five cohorts of college graduates and discuss why "career and family" outcomes changed over time...

Economics 113 Practice Midterm

Economics 113 Practice Midterm

A. One-Sentence Identifications: For each of the fifteen terms below, briefly state the importance of each of the following people/places/things/concepts for American economic history since 1890 or so. A good strategy is to tie each ID into one or more of the major factors of production: land, labor, capital, technology, and institutions:

Gold standard; New Deal; Marshall Plan; Plessy vs. Ferguson; General Motors; Theodore Roosevelt; J.P. Morgan; American Federation of Labor; Congress of Industrial Organizations; John Maynard Keynes; Great Depression; Panic of 1907; high-school movement; Herbert Hoover; Pullman strike.

B. One-Paragraph Discussions: Write one paragraph (three to six sentences) answering each of the following questions:

1. What are the arguments for the belief that the high level of stock prices in August-September 1929 reflected justified if optimistic confidence in the future of the American economy? What are the arguments against?
2. Why was America a largely laissez-faire economy before the Great Depression? And how did the coming of the Great Depression change Americans' beliefs about the role of government?
3. What were the arguments for and against immigration in the generation before the Great Depression? How do they compare to the arguments for and against immigration today?

C. Essay: Write an essay on the following topic:

Outline the major changes in the economic position of African-Americans over the twentieth century. Draw up a balance sheet.

D. A Comparative Business Cycle Exercise:

Start with the simplest possible Keynesian model of the economy:

Y = C + I; production Y equals consumption C plus investment I C = cY; consumption C is a constant fraction c of income Y

1. Solve for Y as a function of the marginal propensity to consume c_y and investment I.
2. If the marginal propensity to consume c were to fall from 0.75 to 0.5, what would you expect to happen to the size of fluctuations in Y if fluctuations in I remained of the same magnitude?
3. Between the pre-WWII era and the recent past, the marginal propensity to consume had fallen from 0.75 to 0.5, and yet the size of fluctuations in Y had fallen by three-quarters. What would you conclude about the changing size of fluctuations in investment I?