Economics of Culture and Institutions

April 21-22, 2017
Alberto Bisin of New York University and Paola Giuliano of the University of California at Los Angeles, Organizers

Ruixue Jia, the University of California at San Diego, and Hongbin Li, Tsinghua University

Access to Elite Education, Wage Premium and Social Mobility: The Truth and Illusion of China's College Entrance Exam

This paper studies the returns to elite education and the implications of elite education on elite formation and social mobility, exploiting an open elite education recruitment system — China's College Entrance Exam. Jia and Li conduct annual national surveys of around 40,000 college graduates during 2010-2015 to collect their scores at the college entrance exam, job outcomes, and other individual and family characteristics. Exploiting a discontinuity in elite university eligibility around the cutoff scores, they find a sizable wage premium of elite education but elite education eligibility does not necessarily promise one's entry into the elite class (measured by occupation, industry and other non-wage benefits). While elite education eligibility does significantly affect one's mobility, it does not alter the influence of one's parental background. The researchers also find that the wage premium is more consistent with the role of university-related networks and signaling than that of human capital.

Oded Galor, Brown University and NBER; Ömer Özak, Southern Methodist University; and Assaf Sarid, Tel-Aviv University

Geographical Origins and Economic Consequences of Language Structures

Galor, Özak, and Sarid explores the economic causes and consequences of language structures. They advance the hypothesis and establish empirically that variations in pre-industrial geographical characteristics that were conducive to higher returns to agricultural investment, gender gaps in agricultural productivity, and the emergence of hierarchical societies, are at the root of existing cross-language variations in the structure of the future tense and the presence of grammatical gender and politeness distinctions. Moreover, the research suggests that while language structures have largely reflected past human experience and ancestral cultural traits, they have independently affected human behavior and economic outcomes.

Felipe Valencia Caicedo, Bonn University

The Mission: Human Capital Transmission, Economic Persistence and Culture in South America

This article examines the long-term consequences of a historical human capital intervention. The Jesuit order founded religious missions amongst the Guarani, in modern-day Argentina, Brazil, and Paraguay. Before their expulsion in 1767, missionaries instructed indigenous inhabitants in reading, writing, and various crafts. Using archival records and municipal census data, Valencia Caicedo shows that educational attainment was and remains higher (by about 15%) 250 years later in areas of former Jesuit presence. These educational differences have also translated into 10% higher incomes today. The positive effect of Jesuit missions emerges after comparing them with abandoned Jesuit missions and Franciscan missions. The enduring effects observed are consistent with transmission mechanisms of occupational and cultural persistence. Robustness checks suggest that results are not driven by migration, urbanization or tourism.

Sascha O. Becker, the University of Warwick, and Luigi Pascali, Universitat Pompeu Fabra

Religion, Division of Labor and Conflict: Anti-Semitism in German Regions over 600 Years

Anti-Semitism continues to be a widespread societal problem rooted deeply in history. Using novel city-level data from Germany for more than 1,000 cities as well as county-level data, Becker and Pascali study the role of economic incentives in shaping the co-existence of Jews, Catholics, and Protestants. The Catholic ban on usury gave Jews living in Catholic regions a specific advantage in the money-lending sector. Following the Protestant Reformation (1517), the Jews lost this advantage in regions that became Protestant but not in those regions that remained Catholic. The researchers show that 1) the Protestant Reformation induced a change in the geography of anti-Semitism with persecutions of Jews and anti-Jewish publications becoming more common in Protestant areas relative to Catholic areas; 2) this change was more pronounced in cities where Jews had already established themselves as moneylenders; 3) the Reformation reduced the specialization of Jews in the financial sector in Protestant regions but not in Catholic regions. The researchers interpret these findings as evidence that, following the Protestant Reformation, the Jews living in Protestant regions lost their comparative advantage in lending. This change exposed them to competition with the Christian majority leading, eventually, to an increase in anti-Semitism.

Leonardo Bursztyn, the University of Chicago and NBER; Thomas Fujiwara, Princeton University and NBER; and Amanda Pallais, Harvard University and NBER

'Acting Wife': Marriage Market Incentives and Labor Market Investments (NBER Working Paper No. 23043)

Do single women avoid career-enhancing actions because these actions could signal personality traits, like ambition, that are undesirable in the marriage market? Bursztyn, Fujiwara, and Pallais answer this question through two field experiments in an elite U.S. MBA program. Newly-admitted MBA students filled out a questionnaire on job preferences and personality traits to be used by the career center in internship placement; randomly-selected students thought their answers would be shared with classmates. When they believed their classmates would not see their responses, single and non-single women answered similarly. However, single women reported desired yearly compensation $18,000 lower and being willing to travel seven fewer days per month and work four fewer hours per week when they expected their classmates would see their answers. They also reported less professional ambition and tendency for leadership. Neither men nor non-single women changed their answers in response to peer observability. A supplementary experiment asked students to make choices over hypothetical jobs before discussing their choices in their career class small groups; the researchers randomly varied the groups' gender composition. Single women were much less likely to select career-focused jobs when their answers would be shared with male peers, especially single ones. Two results from observational data support the experimental results. First, in a new survey, almost three-quarters of single female students reported avoiding activities they thought would help their career because they did not want to appear ambitious. They eschewed these activities at higher rates than did men and non-single women. Second, while unmarried women perform similarly to married women in class when their performance is kept private from classmates (on exams and problem sets), they have significantly lower participation grades.

Filipe R. Campante, Harvard University and NBER, and Davin Chor, National University of Singapore

"Just Do Your Job": Obedience, Routine Tasks, and the Pattern of Specialization

Campante and Chor study the interplay between cultural attitudes and the economic environment, focusing on attitudes towards obedience in the workplace. They establish two key stylized facts: First, at the country level, an upward shift in workplace obedience over time is associated with more exporting in industries that feature a high routine task content ("Specialization Fact"). Second, at the individual level, the degree of "export-routineness" in the economic environment that respondents were exposed to in their formative years &mash; but not in their adult years — shapes the pro-obedience attitudes that they carry with them into the workforce ("Obedience Fact"). Together, these two facts show that cultural attitudes on workplace obedience respond systematically to economic incentives, and that such a culture in turn shapes the subsequent pattern of industry specialization. The researchers develop an overlapping generations model of human capital investment and cultural transmission, to understand how this aspect of culture and specialization patterns in the economy are jointly determined in the long run. In particular, the model demonstrates the possibility of an "obedience trap": countries may specialize in routine sectors (e.g., basic manufacturing) that foster a culture of obedience, at the expense of the development of more nonroutine and potentially more productive activities.

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