We present evidence that the traditional structure of society is an important determinant of the scope of trust today. Within Africa, individuals belonging to ethnic groups that organized society using segmentary lineages exhibit a more limited scope of trust, measured by the gap between trust in relatives and trust in non-relatives. This trust gap arises because of lower levels of trust in non-relatives and not higher levels of trust in relatives. A causal interpretation of these correlations is supported by the fact that the effects are primarily found in rural areas where these forms of organization are still prevalent.

Acemoglu, Johnson, and Robinson (2001) established that economic institutions today are correlated with expected mortality of European colonialists. David Albouy argues this relationship is not robust. He drops all data from Latin America and much of the data from Africa, making up almost 60 percent of our sample, despite much information on the mortality of Europeans in those places during the colonial period. He also includes a “campaign” dummy that is coded inconsistently; even modest corrections undermine his claims. We also show that limiting the effect of outliers strengthens our results, making them robust to even extreme versions of Albouy's critiques. (JEL D02, E23, F54, I12, N40, O43, P14)

We exploit differences in European mortality rates to estimate the effect of institutions on economic performance. Europeans adopted very different colonization policies in different colonies, with different associated institutions. In places where Europeans faced high mortality rates, they could not settle and were more likely to set up extractive institutions. These institutions persisted to the present. Exploiting differences in European mortality rates as an instrument for current institutions, we estimate large effects of institutions on income per capita. Once the effect of institutions is controlled for, countries in Africa or those closer to the equator do not have lower incomes. (JEL O11, P16, P51)

Lack of trust in state institutions, often due to poor service provision, is a pervasive problem in many developing countries. If this increases reliance on non-state actors for crucial services, the resulting self-reinforcing cycle can further weaken the state. This paper examines whether such a cycle can be disrupted. We focus on dispute resolution in rural Punjab, Pakistan. We find that providing information about reduced delays in state courts leads to citizens reporting higher willingness to use state courts and to greater fund allocations to the state in two lab-in-the-field games designed to measure trust in state and non-state actors in a high-stakes setting. More interestingly, we find indirect effects on non-state actors. After receiving state positive information, respondents report lower likelihood of using non-state institutions and reduce funds allocated to them in field games. Furthermore, we find similar direct and indirect effects on a battery of questions concerning people's beliefs about these actors, including a decreased allegiance to the non-state actor. We rationalize these results with a model of motivated reasoning whereby reduced usage of non-state institutions makes people less likely to hold positive views about them. These results indicate that, despite substantial distrust of the state in Pakistan, credible new information can change beliefs and behavior. The feedback loop between state ineffectiveness and the legitimacy of non-state actors may be reversible.

We build a model of child labor and study its implications for welfare. We assume that there is a trade‐off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully internalize its negative effects. This occurs when bequests are zero or when capital markets are imperfect. We also study the effects of a simple ban on child labor and derive conditions under which it may be Pareto improving in general equilibrium. We show that the implications of child labor for fertility are ambiguous.

We use the effect of the Dissolution of the English Monasteries after 1535 to test the commercialization hypothesis about the roots of long-run English economic development. Before the Dissolution, monastic lands were relatively unencumbered by inefficient feudal land tenure but could not be sold. The Dissolution created a market for formerly monastic lands, which could now be more effectively commercialized relative to nonmonastic lands, where feudal tenure persisted until the twentieth century. We show that parishes affected by the Dissolution subsequently experienced a rise of the gentry and had more innovation and higher yield in agriculture, a greater share of the population working outside of agriculture, and ultimately higher levels of industrialization. Our results are consistent with explanations of the Agricultural and Industrial Revolutions which emphasize the commercialization of society as a key precondition for taking advantage of technological change and new economic opportunities.

We present a model of technologically interconnected countries that benefit and potentially contribute to advances in the world technology frontier. Greater inequality between successful and unsuccessful entrepreneurs increases entrepreneurial effort and a country’s contribution to that frontier. Under plausible assumptions, the world equilibrium is asymmetric, involving different economic institutions and technology levels for different countries. Some countries become technology leaders and opt for a type of “cutthroat” capitalism with greater inequality and innovations, while others free ride on the cutthroat incentives of the leaders and choose a more “cuddly” form of capitalism with greater social insurance for entrepreneurs.

We study the effect of constraints on chiefs' power on economic outcomes, citizens' attitudes, and social capital. A paramount chief in Sierra Leone must come from a ruling family originally recognized by British colonial authorities. In chiefdoms with fewer ruling families, chiefs face less political competition, and development outcomes are significantly worse today. Variation in the security of property rights over land is a potential mechanism. Paradoxically, with fewer ruling families, the institutions of chiefs' authority are more highly respected, and measured social capital is higher. We argue that these results reflect the capture of civil society organizations by chiefs.

Existing studies establish a strong cross-country correlation between income and democracy but do not control for factors that simultaneously affect both variables. We show that controlling for such factors by including country fixed effects removes the statistical association between income per capita and various measures of democracy. We present instrumental-variables estimates that also show no causal effect of income on democracy. The cross-country correlation between income and democracy reflects a positive correlation between changes in income and democracy over the past 500 years. This pattern is consistent with the idea that societies embarked on divergent political-economic development paths at certain critical junctures. (JEL D72, E21)

The conventional wisdom views high levels of education as a prerequisite for democracy. This paper shows that existing evidence for this view is based on crosssectional correlations, which disappear once we look at within-country variation. In other words, there is no evidence that countries that increase their education are more likely to become democratic.