Development of the American Economy

Article excerpt

NBER's Program on the Development of the American Economy, directed by Claudia Goldin of Harvard University, met in Cambridge on March 2. The following papers were discussed:

Daniel Bogart, University of California, Irvine, and Gary Richardson, University of California, Irvine and NBER, "Institutional Adaptability and Economic Development: The Property Rights Revolution in Britain, 1700 to 1830" (NBER Working Paper No. 13757)

Charles Calomiris, Columbia University and NBER, and Jonathan Pritchett, Tulane University, "Preserving Slave Families for Profit: Traders Incentives and Pricing in the New Orleans Slave Market"

Joseph H. Davis, Vanguard Group and NBER; Christopher Hanes, SUNY Binghamton; and Paul W. Rhode, University of Arizona and NBER, "Harvests and Business Cycles in Nineteenth Century America"

Leah P. Boustan, University of California, Los Angeles and NBER, and Robert A. Margo, Boston University and NBER, "Spatial Mismatch and the Formation of Bad Ghettos: New Evidence from the U.S. Postal Service"

Claudia Goldin and Lawrence F. Katz, Harvard University and NBER, "Transitions: Career and Family Lifecycles of the Educational Elite"

Daniel Raff, University of Pennsylvania and NBER, "The Book-of-the-Month Club: A Reconsideration"

Adaptable property-rights institutions, Bogart and Richardson argue, foster economic development. The British example illustrates this point. Around 1700, Parliament established a forum where rights to land and resources could be reorganized. This venue enabled landholders and communities to take advantage of economic opportunities that could not be accommodated by the inflexible rights regime inherited from the past. In this essay, historical evidence, archival data, and statistical analysis demonstrate that Parliament increased the number of acts reorganizing property rights in response to increases in the public's demand for such acts. This evidence corroborates a cornerstone of the authors' hypothesis.

Calomiris and Pritchett investigate the determinants of slave family discounts, using data from the New Orleans slave market. Large discounts occur in family transactions with and without children. Scale effects do not explain family discounts. Selectivity bias is likely, because in the absence of a scale discount, and in the absence of selectivity bias, family discounts would have created huge unrealized profit opportunities for slave traders from breaking up families that were sold together. Data from the manifests of ships carrying slaves to be sold in New Orleans provide direct evidence for the importance of selectivity bias in explaining slave family discounts. Children likely to have been shipped with their mothers are 1-2 inches shorter than children of the same sex and age who are unaffiliated, depending on age. Family discounts reflect the fact that the market selectively attached value to keeping some families together to take advantage of family members' willingness to provide care to other family members.

Davis and his co-authors observe that most major American industrial business cycles in the era from the late 1870s to WWI were caused by fluctuations in the size of the cotton harvest attributable to economically exogenous factors such as weather. The wheat and corn harvests did not affect industrial production; nor did the cotton harvest before the late 1870s. The unique effect of the cotton harvest on nonagricultural activity in this period can be explained by a standard open-economy Keynesian model of the U. …