The Medieval Roots of Inclusive Institutions: from the Norman Conquest of England to the Great Reform Act

Charles Angelucci (Columbia University)
Simone Meraglia (University of Exeter)
Nico Voigtlaender (UCLA)

Abstract : The representation of merchant interests in parliaments played a crucial role in constraining monarchs’ power and expanding the protection of property rights. We study the process that led to the inclusion of merchant representatives in the English Parliament, using a novel comprehensive dataset for the universe of more than 600 English towns (boroughs). Our data comprise information on medieval transport infrastructure, economic importance, self-governance, representation in Parliament, and the voting behavior of local MPs. Our analysis begins with the Norman Conquest in 1066 – an event of enormous political change that resulted in homogenous formal institutions across England. From this starting point, we document a two-step process: First, monitoring issues led to inefficiencies in the king’s tax collection, especially with the onset of the Commercial Revolution in the 12th century. This gave rise to mutually beneficial agreements (Charters of Liberties), whereby medieval merchant towns obtained the right of self-administered tax collection. Second, we show that these charters were stepping stones towards representation in the English Parliament after its creation in 1295: local autonomy meant that subsequently, extra-ordinary taxation (e.g., to finance wars) could not be easily imposed by the king, but instead had to be negotiated – and the efficient institution to do so was Parliament. We show that royal boroughs with trade-favoring geography were much more likely to be represented in Parliament, and that this relationship worked through Charters of Liberties. We also show that medieval self-governance had important long-term consequences and interacted with nationwide institutional changes. Boroughs with medieval charters had inclusive local elections of public officials and MPs, and they tended to support the Great Reform Act of 1832, which enfranchised newly industrialized boroughs and thereby expanded the pro-trade coalition in Parliament.

State Capacity and Public Goods: Institutional Change, Human Capital, and Growth in Early Modern Germany

Jeremiah Dittmar (LSE)
Ralf Meisenzahl (Federal Reserve Board)

Abstract : What are the origins and consequences of the state as a provider of public goods? We study institutional changes that increased state capacity and public goods provision in German cities during the 1500s, including the establishment of mass public education. We document that cities that institutionalized public goods provision in the 1500s subsequently began to differentially produce and attract upper tail human capital and grew to be significantly larger in the long-run. Institutional change occurred where ideological competition introduced by the Protestant Reformation interacted with local politics. We study plague outbreaks that shifted local politics in a narrow time period as a source of exogenous variation in institutions, and find support for a causal interpretation of the relationship between institutional change, human capital, and growth.

Drivers of Fragmented Production Chains: Evidence from the 19th Century

Reka Juhasz (Columbia University)
Claudia Steinwender (Harvard Business School)

Abstract : Instantaneous communication via the Internet and efficient shipping of goods across the globe are widely believed to have caused today’s global fragmentation of production processes. Introducing the concept of codifiability of product specifications, our model predicts reductions in communication times (shipping times) to increase imports of intermediate inputs by more (less) than final goods. We test this hypothesis by examining the global cotton textile industry during the 19th century. This allows us to exploit exogenous variation in the roll-out of the global telegraph network due to the ruggedness of the sea-bed and the opening of the Suez Canal in 1869 to estimate causal effects. Consistent with our model, improvements in communication time disproportionately increase imports of the more codifiable intermediate inputs, while improvements in shipping time disproportionately increase imports of the less codifiable final goods.