Farewell President! Political Favoritism, Economic Inequality, and Political Polarization

Abstract : This paper examines the effect of political favoritism on economic inequality in the short run and political polarization in the long run. We exploit the sudden death of an authoritarian leader – President Chiang Ching-Kuo of Taiwan – in 1988 to generate plausibly exogenous variation in partiality. We find that Chiang’s nationalist regime conducted political favoritism broadly toward political immigrants via cronyism (allocating public sector positions) and also differentially toward specific subgroups of political immigrants via wage discrimination (offering higher payroll to these subgroups within the public sector). Favoritism led to a 7.2 percent immigrant payroll premium, which accounted for nearly three quarters of the immigrant-native payroll gap at the time. This in turn propelled overall income inequality by 4.5 percent. Moreover, political favoritism breeds political polarization in the long run by pulling apart the political views of immigrants and natives. Compared with natives, immigrants who were exposed to favoritism tend to adopt political positions that are aligned with the nationalist party today: they are more likely to support unification with China, and are more inclined to trust the mainland Chinese government and its citizens. Exposed immigrant (native) swing voters are also more (less) likely to vote for the nationalist party today.

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The Political Economic Causes of the Soviet Great Famine, 1932–33

Abstract : This paper documents several new facts about the Soviet Great Famine, 1932–33. There was no aggregate food shortage. Regional mortality rates were unrelated to per capita food production, but positively associated with ethnic Ukrainian population share. Political loyalty to and peasant resistance against the regime were positively associated with famine mortality and state food procurement in regions populated by ethnic Ukrainians. The findings show that, all else equal, ethnic Ukrainians suffered disproportionally high famine mortality and imply ethnic bias in famine-era policies. A back-of-the-envelope calculation indicates that ethnic bias against Ukrainians explains 77% of famine deaths in Russia, Ukraine and Belarus, and 92% in Ukraine.

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The Impact of Presidential Appointment of Judges: Montesquieu or the Federalists?

Abstract : A central question in development economics is whether there are adequate checks and balances on the executive. This paper provides causal evidence on how increasing constraints on the executive, through the removal of Presidential discretion in judicial appointments, promotes the rule of law. The age structure of judges at the time of the reform and the mandatory retirement age law provide us with an exogenous source of variation in the removal of Presidential discretion in judicial appointments. According to our estimates, Presidential appointment of judges results in additional land expropriations by the government worth 0.14 percent of GDP every year.

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Warfare and Economic Inequality: Evidence from Preindustrial Germany (c. 1400-1800)

Abstract : What was the impact of military conflict on economic inequality? This paper presents new evidence about the relationship between military conflicts and economic inequality in preindustrial Germany, between 1400 and 1800. I argue that ordinary military conflicts increased economic inequality. Warfare raised the financial needs of towns in preindustrial times, leading to more resource extraction from the population. This resource extraction happened via inequality-promoting channels, such as regressive taxation. Only in truly major wars destruction might outweigh extraction, and reduce inequality. To test this argument a novel panel dataset is constructed combining information about economic inequality in 75 localities and more than 700 conflicts over four centuries. The analysis finds that the many ordinary conflicts – paradigmatic of life in the preindustrial world – were continuous reinforcers of economic inequality. The findings suggests that there existed two countervailing effects of conflicts on inequality: destruction and extraction. I confirm that the Thirty Years’ War was indeed a great equaliser, but this was an exception and not the rule.

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