CEU Electronic Theses and Dissertations, 2017
| Author | Menyhért, Bálint |
|---|---|
| Title | History as an Agent of Growth: Natural Experiments from Central Europe |
| Summary | This thesis consists of two single-authored and one co-authored chapters that are independent yet related. Each chapter investigates a specific societal or cultural driver of economic development in the historical context, using a unique, hand-collected dataset of more than a 1000 townships from historical Hungary of the 1869-1910 period. My research demonstrates the persistent influence of culture on economic outcomes, and also highlights the wealth of accessible and unexplored historical data for Central Europe. Chapter 1 is my job market paper. It studies the effects of population mixing on economic growth in the Austro-Hungarian Monarchy, the most diverse country formation in modern European history. Based on the aforementioned self-compiled dataset, I find that ethnically and religiously diverse townships grew up to 20-60% faster in the 1880-1910 period than their homogeneous neighbors. These results are based on three different methodologies. First, OLS regressions take advantage of the largely random geographical patterns in diversity as a natural experiment. Second, endogeneity concerns are addressed by a novel IV strategy based on townships' previous exposure to warfare, using self-compiled data of more than 2000 military events dating back to the 15-17th centuries. Third, to understand the mechanism through which diversity translated to higher economic growth in an era of rapid industrialization, I develop a simple growth model that highlights the potential trade-offs between comparative productivity advantages and reduced knowledge spillovers diverse communities are likely to face. Empirical tests of the model's predictions confirm that diversity led to more diversified local economies, industrial sorting along ethnic and religious lines, as well as higher employment concentration in productive industries. Chapter 2 proposes a new explanation for the historical source of Protestant economic prosperity based on the reformed institution of marriage and the modern family. Specifically, I argue that Calvin's insistence on spousal duty to love one another, rationalize the household, and educate children for the glory of God was instrumental in the emergence of the child-centered nuclear family and subsequent economic growth. The empirical analysis of the paper, based on the referenced township-level dataset from historical Hungary, confirms the economic progressiveness of puritan Calvinists relative to their Catholic or Lutheran neighbors, and attributes it to observed differences in marriage patterns, household size and fertility rates, both before and during the demographic transition. A simple model predicts that lower exogenous fertility preference can lead to higher per capita income when factors of production are fixed, consistent with the historical evidence of less crowded and fragmented use of agricultural land in Calvinist places. Chapter 3 is a joint work with Miklós Koren. It studies the effects of railway roll-out on the spread of ideas and institutions in 19th-century Hungary. Specifically, we find that cultural commodities such as civil organizations, libraries, press outlets, coffee houses and theaters were highly concentrated in townships that had been connected to the railway network, to a much larger degree than what economic fundamentals would imply. By employing a series of different econometric approaches, we are able to identify railroads as important capillaries of institutional development. These results can serve as a starting point for developing and testing a simple model of behavioral contagion where the spatial characteristics of the railway network are explicitly accounted for, as well as for quantifying the effects of institutional development on economic growth at the local level. |
| Supervisor | Koren, Miklós |
| Department | Economics PhD |
| Full text | https://www.etd.ceu.edu/2017/menyhert_balint.pdf |
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