International Integration and Social Identity
Boaz Abramson (Stanford)
Moses Shayo (Hebrew University of Jerusalem)

Abstract : This paper offers a first step towards introducing social identity into international economics. We develop a simple framework to study the interaction between identity politics and international integration, allowing identities themselves to be endogenous. Contrary to widespread intuitions, we find that a robust union does not require that all members share a common identity. Nor is a common identity likely to emerge as a result of integration. Furthermore, while national identification in the periphery leads to premature breakup, a common identity can sometimes lead to excessively large unions. The general result is that a union is more fragile when periphery countries have high ex-ante status. Low-status countries are less likely to secede, even when between-country economic differences are large and although union policies impose significant hardship. We trace the implications of the model for likely entrants and defectors from the EU and the Euro.

The Rise of Identity Politics
Tim Besley (London School of Economics)
Torsten Persson (IIES, Stockholm University)

Abstract : We develop a dynamic model of multi-dimensional politics to ex- plore how political cleavages, policies, and social identities interact over time. The model yields insights into the profound political changes we have witnessed around the world, as economic shocks and trend- wise breakdowns of traditional social hierarchies have reinvigorated nationalist sentiments. We show how such sentiments can shape im- migration policy, and how this may shape the outlook for the next gen- eration. Shifting outlooks are reflected in political preferences implied by social-identity choices, which are modeled as a process of cultural evolution. Expected policy thus feeds back to political preferences, rooted in endogenous social identities. Once we allow for endogenous political organization, formation of social movements or new politi- cal parties, the model can also encompass mechanisms of hysteresis, such that temporary shifts in nationalism can have permanent effects.

On the Invention of Identity Politics: the Buraku Outcastes in Japan
J. Mark Ramseyer (Harvard University)

Abstract : Using 14 national censuses and a wide variety of first-hand accounts, I trace the transformation of Japan's putative outcastes and their nominal human rights organization into a heavily criminal extortion machine. Scholars have long described the outcastes -- the "burakumin" -- as descended from a pre-modern leather-workers' guild. Their members suffer discrimination because their ancestors handled carcasses, and ran afoul of a traditional Japanese obsession with ritual purity. In fact, most burakumin are descended not from leather-workers, but from poor farmers with distinctively dysfunctional norms. Others may or may not have shunned them out of concern for purity, but they certainly would have shunned many of them for their involvement in crime and their disintegrating family structures. The modern transformation of the buraku began in 1922, when self-described Bolsheviks lauched a buraku "liberation" organization. To fit the group within Marxist historical schema, they invented for it the fictive identity as a leather-workers' guild that continues to this day. Bitter identity politics followed. Within a few years, criminal entrepreneurs hijacked the new organization, and pioneered a shakedown strategy that coupled violent accusations of bias with demands for massive amounts of money. Selective out-migration and spiraling levels of public subsidies ensued. The logic follows straightforwardly from the economic logic outlined by Becker and Hirschman: given ever-larger amounts of (expropriable) subsidies, burakumin with the lowest opportunity costs faced ever-larger incentives to stay in the buraku and invest in criminal careers; given the virulent public hostility that this strategy generated, those burakumin with the highest legitimate career options abandoned the community and merged into the general public instead.