Lecture 15

Need a parametric assumption to relate it to average

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Unformatted text preview: xed in quantity implies land price fully captures marginal producer welfare. Need a parametric assumption to relate it to average landowner welfare. Proposition 5: If wages are exogenous, and F (α) is a Pareto distribution with shape parameter b > 1 and scale parameter a < α∗ , 1 then b−1 × dv is a sufficient statistic for the change in average dp landowner welfare, Suresh Naidu (Guest Lecture) dW RW dp . Political Economy in the Post-Bellum U.S. South October 28, 2009 28 / 29 Landowner Incidence Estimate Tail Distribution of α from 1880 Ransom and Sutch data Check distribution of capital values has a Pareto-tail: Gabaix and Ibragimov (2009) estimator gives a shape parameter of b = 2.33 × dv = .7 × .07 × 1.5 billion implies an aggregate increase in landowner wealth dp of 79 million (overall) 1 1−b Discount back at .62 (.05 per year for 10 years) to get flow value of 29.8 million to landowners: 600 million today. Suresh Naidu (Guest Lecture) Political Economy in the Post-Bellum U.S. South October 28, 2009 29 / 29 The End of the Southern Equilibrium What ended the “Southern equilibrium” was the juxtaposition of several forces including black migration to northern cities after WWII, the mechanization of cotton picking in the 1950s and 1960s, the collective action of the civil rights movement and a sequence of Supreme Court and government decisions, such as Brown versus Board of Education in 1954, the Civil Rights Act of 1964 and the Voting Rights Act of 1965. Other potential explanations – dissemination of air conditioning, eradication of hookworm (see Hoyt Bleakley (2003) “Disease and Development: Evidence from the American South,” Journal of the European Economic Association.) These factors interacted to …nally change the institutions of Southern agriculture and led to a rapid economic convergence to the rest of the US. James A. Robinson (Harvard) The Emergence of Modern Economic Growth: A Comparative and2, 2008 November Historical Analysis 12 / 18 Sou...
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